In certain banks, If you choose the credit card as the default option in a debit-cum-credit card, you will be able to make it a debit card post-purchase, and vice-versa. Which means you can use debit cards at the ATM machine and for making payments. The money, in both cases, gets directly debited from your account. If you have Rs 10,000 in your account, the amount you can spend, or withdraw, through your card cannot exceed this limit.
But a credit card basically means what you spend is not related to how much money you have in your account. You are restricted only by your credit limit. This is the limit the bank sets on how much you can spend through your credit card in a month. So, even if you have only Rs 5,000 in your account but your credit limit is Rs 50,000, you are free to spend up to Rs 50,000.
You could also have Rs 1,00,000 in your account, but your credit limit is only Rs 50,000. In a debit card, you would be able to spend or withdraw up to Rs 1,00,000. In a credit card it would be restricted to Rs 50,000, which is your credit limit. Hence the major difference comes out to be that in a debit card, the money is directly pulled from your account. In technical terms, this means you have no free credit line. Whereas, a credit card requires the bank to make a payment to the merchant establishment (shop, hotel or wherever you spend money using your card). The cardholder settles the bill later. This is not the case with a debit card. Here, the amount is deducted immediately from your bank account.
The merchant establishment will have a debit terminal. When you use your card to make the payment, it will be swiped. The moment this is done, an electronic message is sent to the bank which checks to see if the customer has that much money in his/her account. If yes, the amount is debited (taken) from the customer's account and credited (added) to the merchant's account.
These cards are convenient, as you do not need to carry two different cards with you. If credit card is the default option, a debit card transaction can be made using these cards and the reverse is also possible. After every transaction, you will need to reply to a bank generated sms which will take in your preference of credit or debit for that particular usage.
However, these cards are alsoexpensive. Like other credit cards, it gives reward points for purchases made.Â
And many customers actually think that they are quite a hassle. The entire procedure of swiping and replying to an SMS makes it cumbersome. Also, paying big bucks just to get a choice between credit and debit transaction also makes little sense to most people, as they'd rather carry two cards, than pay so much for one. Also, some people feel that having a credit cum debit card is likely to spoil people's financial habits, and it stands a good chance of messing other transactions of your account as well.Â
But a credit card basically means what you spend is not related to how much money you have in your account. You are restricted only by your credit limit. This is the limit the bank sets on how much you can spend through your credit card in a month. So, even if you have only Rs 5,000 in your account but your credit limit is Rs 50,000, you are free to spend up to Rs 50,000.
You could also have Rs 1,00,000 in your account, but your credit limit is only Rs 50,000. In a debit card, you would be able to spend or withdraw up to Rs 1,00,000. In a credit card it would be restricted to Rs 50,000, which is your credit limit. Hence the major difference comes out to be that in a debit card, the money is directly pulled from your account. In technical terms, this means you have no free credit line. Whereas, a credit card requires the bank to make a payment to the merchant establishment (shop, hotel or wherever you spend money using your card). The cardholder settles the bill later. This is not the case with a debit card. Here, the amount is deducted immediately from your bank account.
The merchant establishment will have a debit terminal. When you use your card to make the payment, it will be swiped. The moment this is done, an electronic message is sent to the bank which checks to see if the customer has that much money in his/her account. If yes, the amount is debited (taken) from the customer's account and credited (added) to the merchant's account.
These cards are convenient, as you do not need to carry two different cards with you. If credit card is the default option, a debit card transaction can be made using these cards and the reverse is also possible. After every transaction, you will need to reply to a bank generated sms which will take in your preference of credit or debit for that particular usage.
However, these cards are alsoexpensive. Like other credit cards, it gives reward points for purchases made.Â
And many customers actually think that they are quite a hassle. The entire procedure of swiping and replying to an SMS makes it cumbersome. Also, paying big bucks just to get a choice between credit and debit transaction also makes little sense to most people, as they'd rather carry two cards, than pay so much for one. Also, some people feel that having a credit cum debit card is likely to spoil people's financial habits, and it stands a good chance of messing other transactions of your account as well.Â