Difference between Credit card and Debit card .
The credit card and debit are the modern forms of plastic currency which can be easily carried by people without the need of using actual cash in hand for any type of transaction. It is safe as well as saves time while doing any transaction with zero errors. ATM ( Automated Teller Machine) is used for withdrawing cash by these credit and debit cards.
Also Read :-What is UPI and what are the benefits of UPI
What is ATM ?
The full form of ATM is "Automated Teller Machine". It was invented by John Adrian Shepherd-Barron. He was born in Shillong, Meghalaya, India on 23 June, 1925. He invented ATM in Enfield, London on 27 June,1967. The credit cards and debit cards are also known as "ATM Card's" as they are used to withdraw cash from ATM.
What is a Debit Card ?
Earlier it was seen that people used to stand in line for hours just to withdraw their own deposited amount in their bank account and it used to be a very hectic process to stand inline for hours, fill the withdrawal form and then get the cash. Banks also remained closed on Sunday's which made people run out of cash during emergency period's so to tackle all these problems the concept of "Debit Cards" was introduced.
Debit card is used to withdraw our own money from our own bank account anywhere in the world and at anytime by the help of ATM. It also became convenient for people to conduct any transaction without worrying to carry any cash.
Debit card's are safe to use as they contain various security features.
Lets see what are these security feature's and how they protect us from any scam :-
1. There are 16 digits of debit card number which are needed to be entered for any type of online transaction.
2. There is an expiry date just below the debit card number.
3. The Debit card owner's name is written below the expiry date.
4. There is CVV "Card Verification Value" at the back side of the debit card for extra security purposes and are never allowed to be saved by any online website.
These 4 security things are mentioned on the debit card which are to be kept confidential by it's owner to safeguard it's money however transaction still cannot be completed as there are two extra security layer which are needed the most to confirm the transaction. they are "PIN" and "OTP".
PIN- It stands for "Personal Identification Number". It is required every time you need to withdraw cash from ATM. It can be of 4 or 6 digits and to be kept highly confidential and is highly recommended to be memorized by its owner.
OTP - It stand's for "One Time Password". It is required every time to complete any online transaction. It is sent to the registered mobile number of the owner's bank account. The validity of OTP usually lasts for 10 minutes and new one is issued in case if the transaction has failed and a new transaction is required.
These are feature's of Debit card. In today's modern world we have got a new way to withdraw cash from the ATM known as "Cardless Withdrawal" in which we don't even need to use our debit card's for cash withdrawal from our ATM's.
What is Credit Card ?
Credit card is used for lending money which is provided by the bank's to its selected customers. Earlier people used to borrow money from their local landlords or from friends which used to charge heavy interests. People who used to go their local banks for loans were demanded bribe's in order to get their loan application passed from the bank employees so to tackle these issue's and to create a simple solution for it's customer's, bank's came up with the "Credit Card" system.
Credit card is provided by the bank's to it's selected customer's who basically have a job or a stable earning source so that they can return the money on time to the bank. The money in the credit card is provided by the bank which can be used anytime during any emergency period and the credit limit is based on the customer's income. A monthly bill is generated and the customer can pay back the amount to the bank in 30-40 day's.
This system has made very convenient for the people to get money during their emergency time without asking anyone and most importantly without paying any interest. People also get rewarded for their one time repayments by earning loyalty points which can be further redeemed during any other purchase's. Companies also run various cashback offer's, discount's on credit cards. People especially the youth are attracted towards it as most of them have a salaried job's and it becomes very helpful for them during any emergency.
There are various Advantages and Disadvantages of credit card:-
There are various Advantages of credit card
1. There are various cashback offer's which are mainly given to the credit card owner's.
2. It also has got the EMI facility which in case make's it easier to purchase expensive products and thus it becomes more convenient to afford them.
3. There are many places where only credit card's are used so it becomes and important thing.
4. It is also easy to keep the track record of money spent.
There are various Disadvantages of credit card
1. It doesn't allow us to withdraw cash from it and penalty is assured if it's done, so it's basically recommended to transfer the money to the merchant rather than paying in cash from the credit card.
2. There is also a provision of heavy penalty if the customer crosses the credit limit.
3. The biggest issue is that it can be overused as people with less attention towards their financial actions can end them up in the debt trap by spending more than they earn.
4. It is also not so secured just like the debit card so its more prone towards theft and scams.
My conclusion :-
The debit card and the credit card are all there for the convenience for the people are it's now up to the people that how they use it in their life. The management of financial actions are must to ensure that money is not wasted by using these facilities rather they are being used for the betterment of life.