The main difference between a credit card and a debit card is that, while the debit card is associated with the balance of your account, the credit card is managed through loans from the card’s financial institution.
In other words, when paying with a debit card, the payment is charged directly to the bank’s savings or checking account. With a credit card, the holder incurs a debt with the bank.
With one you use the money you already have available, while with the other you spend money that you don’t have in your account yet.
Although they have some similarities, such as having the contactless system and the same numerical structure, there are several differences that must be known in terms of how they work to better control expenses.
Whether to make your purchases or to charge your business, knowing the characteristics of each type of card and understanding how they work is vital to organizing your finances and maintaining good financial health.
In this article we will tell you the most important differences to take into account, how you can distinguish them with the naked eye and when it is convenient to use each one, among other very common doubts. Let’s go!
What is the difference between credit and debit card?
The most important difference between a credit card and a debit card is that payment with a debit card is instantly debited from the bank account, while with a credit card it can be deferred and .
There are other differences, in addition to the form of payment. Here are a few:
- Credit cards allow you to finance purchases, so you can pay even if you don’t have enough funds.
- Debit cards do not charge interest. On the contrary, credit ones do, both when withdrawing money and when splitting payments.
- Credit cards allow you to pay in fixed installments, with or without interest, depending on the business. On the other hand, in debit cards this modality is not yet widespread.
- In debit cards, payment is instant, while credit cards offer the possibility of returning what was spent in a total payment or several partial payments.
- As for the requirements to obtain each one, in the case of debit cards, the basic documentation is usually sufficient, while when requesting a line of credit, the requirements are greater and a prior evaluation is necessary.
- When withdrawing cash, with debit cards you can do it for free at your bank, while with a credit card there will always be an associated commission.
Therefore, there is no single difference between credit and debit card.
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How to know if a card is credit or debit?
We already talked about the differences between a credit card and a debit card, in terms of how it works, but how to distinguish them at a glance?
- In the past it was more efficient since now the embossed numbers are a feature that is repeated in both types of card, but whenever a card has printed numbers it is because it is a debit card.
- Examine all sides of the card, especially the area below the signature on the back, as it is usually indicated there whether it is a debit or credit card. Some also include their front face, for example, Visa Debit cards.
If none of these methods work, you can always call the issuing bank so that they provide you with all the necessary information.
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When to use a credit card and when to use a debit card?
It is common to confuse both cards and think that they can work for the same thing. However, they can be given different uses to get the most out of them.
- The credit card can be used when you do not have the necessary balance for the purchase in the savings or checking account. Also, when it is necessary to buy in installments, as long as personal finances are kept in order to prevent debts from accumulating.
- When paying for subscriptions or services, it is convenient to use the debit card, since it supports the automatic debit option, which facilitates the payment of invoices.
- The debit card is more used in daily expenses such as food, leisure, fuel. The credit card is more common in major consumption such as furniture, appliances, technology and those things that can be useful in the long term.
- With a credit card it is particularly useful in case of emergencies, since it allows the payment of extraordinary expenses outside the budget.
- Another of the most important points in the use of both instruments is the possibility of paying with installments, in order to alleviate large expenses. We will go deeper into this point later!
Tip: it is essential to pay attention to two key moments of the month. One is the cut-off or closing date of the account for everything consumed in the previous 30 days, approximately. Another is the payment or expiration date (between 15 and 20 days after closing), which is the limit that the holder has to pay what is consumed without interest.
Can you pay in installments with a debit card?
Yes, although it is a service under development. Its use has not spread among the majority of users, however, there are already several operators that offer this possibility.
In this modality, the financial entity works as an intermediary for the financing that allows debit purchases to be made in installments. This service is carried out through platforms with immediate accreditation of funds for sellers.
Due to the advantages offered to buyers and the attractiveness of this service, more and more businesses are seeking to adhere to this type of system.
In Tiendanube there is the possibility of paying in installments with a debit card, through platforms such as .
The option of making payments in installments without a credit or debit card is also available with systems such as , which work under the “Buy Now, Pay Later” scheme, granting short-term loans.
Which is better: a debit or credit card?
Defining which of the two cards is better will always depend on the interests and needs of each one. Although a credit card provides financial support, at the same time it represents a great responsibility.
Debit cards allow greater control of expenses since with them it is not possible to go into debt, since the money is withdrawn directly from the account.
On the other hand, credit cards have other advantages, such as a more robust security system against fraud and certain benefits that can be accumulated with their use.
In addition, by using this type of card, a credit history is generated that, if favorable, is useful for obtaining loans and financing. But, on the contrary, if the card payment is not responsible, the credit profile turns out to be negative.
To summarize, we present this comparative table with the most relevant aspects to consider when using debit or credit cards.
Debit cards Credit cards Form of payment Money in account Credit from the bank Payment date Instantly Between the closing date and the expiration date of the summary Debts No Debt with the bank, higher or lower according to compliance with payments Interest They do not have, since it is money available in the account Maximum rate of 43% TNA for the financing of unpaid balances Commissions They may have maintenance commissions For maintenance and issuance Cash withdrawal No additional cost at ATMs of the same bank Additional commission in all the entities Associated insurance For theft or fraud Additional travel, accident or online purchases Fees Service in development with some intermediary entities Financing plans of 3, 6, 12, 18 and 24 fixed installments Limit Balance of the own account Limit according to the maximum of the line of credit established by the bank according to the bank profile of the holder Requirements Identification document Evaluac prior confirmation of the bank and proof of income Security Less protection in cases of loss, theft or fraud More robust protection against fraud History Does not affect the credit history Its use affects the credit history of the holder and, therefore, their banking profile Benefits Small discounts on merchants Greater discounts in merchants, points programs and refund of part of the amount
How to accept and charge with credit and debit cards?
If, on the other hand, you have a business and want to know whether or not it is convenient for you to start charging with credit or debit cards, keep reading!
Benefits of accepting card payments
On the one hand, it will give you greater competitiveness since it can be a great differential for more customers to choose your business. In turn, this will cause an increase in sales, since customers will not be limited by their amount of cash when carrying out the operation.
Many customers will prefer to finance their purchase in installments to be able to buy more, which will contribute to raising the average ticket.
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Payment methods
In Argentina there are three options to charge in stores: point of sale terminals (POS), mobile POS and QR code.
POS devices connect to the network of stations and banks, and allow both credit and debit operations to be carried out. In the country, there are two companies that manage its distribution: LaPos and Posnet.
However, in recent years the mobile POS has appeared as a simpler and cheaper alternative, since it can be operated from the cell phone, it is offered at a low cost and with minimal requirements.
The QR payment system was also added, which allows payments to be received through an electronic wallet, without the need to use the physical card.
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How does the payment process work?
If you want to charge with a card in your business, you just have to pass the card through the device or have the customer’s device read the QR and enter the rest of the transaction data.
At that time, the security system that supports the card (for example, Amex, Mastercard or Visa) will review the information, approve or reject the transaction and generate a printed or digital receipt.
Then the merchant bank will send the information to the institution that authorized the transaction, which will verify the operation, approve the amounts and send the corresponding information.
The institution that makes the compensation will notify the client’s bank to carry out the settlement of the debt, this will proceed to make the payment to the bank of the…
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