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How Credit Cards Differ from Debit Cards

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Debit cards can be used to withdraw money directly from your bank accounts or when you shop for anything. On the other hand, credit cards give you the benefit of taking some amount as a loan from the bank for the transaction which can be repaid later. However, in case of credit cards, if an individual does not repay the amount on time or does not pay the minimum amount required, an additional interest rate and penalties are charged.


The basic difference between debit card and credit card is – credit card allows you to pay instantly whenever you want to purchase something, regardless of your account balance. Whereas, in case of debit cards, if your bank balance is low, you cannot make the purchase instantly.

Here are few other ways in which debit cards are different from credit cards:

Withdrawal Limit

In credit cards, a bank pays on your behalf. In debit cards, the specific transaction amount is debited directly from your bank account. The credit limit on your credit card is set based on your credit ratings and payment history. In case of debit cards, the amount in your bank account will be considered as your withdrawal limit.

Paying off Bills

With credit cards, you need to pay off your bills according to your pre-set monthly cycle. Whereas, in debit cards, you do not have to pay any extra bills, as the money gets deducted directly from your account whenever you make a transaction.


Credit cards offer many more benefits for consumers as compared to debit cards due to the ease of returns and refund. They also offer added insurance cover on transactions as compared to debit cards. While debit cards offer similar benefits, they do not provide the level of consumer protection that credit cards do.

Interest Rates

If you are not able to pay off your credit card bills by the due date, you will be charged with higher interest rates. However, since debit cards directly debit amount from your account, you do not have to pay any additional interest or charges.

There is another crucial difference between debit card and credit card. Companies that have an auto-renewal model for online subscriptions, prefer credit card as the mode of transaction. This would eliminate any case of defaults due to insufficient funds in your bank account. While credit cards are convenient to pay for hotel reservations, flight bookings, etc. earning you extra benefits, debit cards are still preferred as the mode of payment for daily use. If you spend a lot, debit cards can help you keep your expenses in check and prevent overspending.


You can also visit YES BANK's website to know more about their Savings Account, NRI Savings Account and Fixed Deposit Accounts.

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