What is the difference between credit card and debit card? Are these one and the same thing or is there an actual difference between these two forms of plastic money? In this post, we will explain all about what is a debit card and what is a credit card along with the difference between the two, i.e. debit card vs credit card. Let’s dig in.
Credit Card vs. Debit Card
A debit card is a plastic card which is linked to the cardholder’s bank account and is used to pay directly from the account, without any cash involvement. A credit card is also a plastic card and does not involve cash exchange. But, the credit card is not linked to the bank account but itself is a separate account which has a specific limit. This limit can be Rs 50,000 or Rs 50 lakhs and the range can fluctuate as per the customer-base.
Credit card-holder can spend money up to this limit which is not actually in his bank account but is more like a loan. At the end of each money, the associated bank releases the credit card statement and a due date within which the due billed amount is to be paid to the bank. If this amount is not paid, then the bank levies interest on the amount as well as finance charges.
Also, when you use a credit card, your credit history gets impacted. If you pay your credit card bills on time, your credit score increases. A credit score (300-900) is a measure of the concerned person’s creditworthiness, i.e. how well they handle their finances, especially line of credit and/or loan. If the bill is not paid timely, the credit score is affected adversely.
The following tabular comparison shows basic difference between credit card and debit card which will further clear the concept:
| Parameters | Credit Card | Debit Card |
| Purpose | To provide customer a line of credit – pay for things from the money they don’t have yet | To lessen the use of cash and provide quick access to one’s account digitally |
| Bill Payment | Bill usually due by the next month – must be paid in time to avoid heft interests and/or penalties | No bill generated as the amount is instantly deducted/debited from the linked bank account |
| ATM | Can be used to withdraw money from ATM – charges very high | Used to withdraw cash from ATM – minimal charges compared to credit card |
| Interest | Interest charges if bill is not paid by due date | No interest levied as the money is already yours, in your bank account |
| Type of Account | A loan account – or a line of credit | No separate account but linked to customer’s bank account, usually savings account |
| Charges | Interest, annual fees, penalty on non-payment of bill and more – all terms as finance charges | Usually no charges, may come with annual charges |
| Uses | For making payments/shopping online or offline, creating & maintain credit score, emergency money needs and insurance cover etc. | For ATM cash withdrawals, shopping/payments online & offline, paying credit card bills, balance enquiry and netbanking etc. |
Top Debit Cards in India, 2023
The following is the list of some of the best debit cards in India for 2023:
SBI debit card: SBI Platinum International Debit Card
- ATM limit (daily): Rs 1 lakh
- Shopping limit (daily): Rs 2 lakhs
- Reward Points: 2 points per Rs 200 spent
HDFC Debit Card: HDFC Easy Shop Platinum Debit Card
- ATM limit (daily): Rs 2 lakhs
- Shopping limit (daily): Rs 5 lakhs
- Reward Points: 1 point per Rs 200 spent
ICICI Bank Debit Card: ICICI Coral Paywave Debit Card
- ATM limit (daily): Rs 1 lakh
- Shopping limit (daily): Rs 5 lakhs
- Reward Points: 2 points per Rs 200 spent
Axis Bank Debit Card: Axis Burgundy Debit Card
- ATM limit (daily): Rs 3 lakh
- Shopping limit (daily): Rs 6 lakhs
- Reward Points: 2 points per Rs 200 spent
HDFC Bank Debit Card: HDFC Millennia Debit Card
- ATM limit (daily): Rs 50,000
- Shopping limit (daily): Rs 3.5 lakhs
- Reward Points: 2.5% cashback points on every online purchase
Top Credit Cards in India, 2023
The below-mentioned is the list of some of the best credit cards in India for 2023:
Travel Credit Card: Standard Chartered EasyMyTrip Credit Card
- Joining Fee: Rs 350
- Annual Fee: Rs 350
- Free domestic & international airport lounge access
- Up to 20% discounts on hotel and flight bookings
Fuel Credit Card: SBI BPCL Credit Card
- Joining Fee: Rs 1,499
- Annual Fee: Rs 1,499
- 1% surcharge waiver on fuel purchase at all BPCL petrol/gas stations
- 25 reward points on every Rs 100 spent on fuel
- Easy & instant reward point redemption at BPCL pumps
Premium Credit Card: SBI Elite Credit Card
- Joining Fee: Rs 4,999
- Annual Fee: Rs 4,999
- Welcome benefits worth joining fee
- Foreign exchange mark-up fee: 1.99%
- 2 reward points on every Rs 100 spent (international purchase)
- Free domestic & international airport lounge access
What is an ATM Card?
An ATM card, as the name suggests, is a card which is used at the ATMs. All debit cards come with this facility and are usually called as debit cum ATM card.
A debit card is also an ATM card but it does not necessarily have to be the case for credit cards. Some credit cards do offer the ATM cash withdrawal facilities but these come at heft charges. This is not the case with debit cards.
Difference between Credit Card and Debit Card: FAQs
You must check the following features: annual fee, joining fee, cashback points, purpose (specifically for travel, shopping, fuel etc.) and interest rate. Pick the credit card with points that align with your requirement and budget most closely.
Where a debit card is linked to your bank deposit account and another form of money, aka, plastic money, a credit card is a card issued on your credit account. When using debit card for shopping/withdrawals, the money is directly and instantly deducted from your bank deposit account. With credit card, you make payments or do shopping but pay for it later, just like a loan.
You can redeem credit card reward points by converting into cash or shopping online using these points. Some banks may also allow for carry forwarding the points which you may use later on.
A cashback point is equivalent to money. On purchase of a certain amount, say Rs 100, your bank issues some cashback points. E.g. 1 cashback point on every Rs 100 spent. 1 cashback point = Re 1.
To increase your credit card limit, firstly check with your bank, either online or in-person. If you’re eligible, the process requires you to fill out a form. Post verification and approval, your credit card limit is increased. Take care not to increase this limit unnecessary as it land you in a debt loop which is the last thing you want from your credit line.
On regular usage of credit card AN paying credit card bills in time and in full leads to an increase in your credit score. It goes down if the said things are done in reverse.
A credit score is a number ranging from 300 to 900. This number depicts your credit worthiness, i.e. how well you manage your finances and how much financial institutions trust you in giving credit. The higher this number, the better will be your credit score and thus, higher will be your chances of getting a loan in future.
No. Credit card is issued upon opening a credit account with the providing bank. A debit card is issued upon creating of a bank account, e.g. savings account (and these are linked together). These two serve different purposes and thus can be converted into each other or be used interchangeably.
If it’s not urgent, kindly refrain from withdrawing cash via credit card. This attracts heavy fees and if you’re not able to pay back this amount in time, the interest and/or penalty is also considerable.
