Two popular payment methods are debit cards and credit cards. The reason they are so desired is that they are applicable almost everywhere, both in offline and online stores. When you have a credit card or debit card with you, you usually don’t need to carry any money. You can either pay by card or withdraw money from ATMs. However, there is a clear difference between credit card and debit card. To determine what works best for your needs, let’s take a closer look at these differences and discuss how credit card interest rates are charged.
What is the difference between a credit card and a debit card?
You can easily take advantage of debit card and credit card online. Credit and debit cards, while having similar functions, work differently. Let’s take a look at the following 7 major differences between them:
- Credit limit –
- Source of funds –
- ATM withdrawals –
- ATM withdrawals are chargeable for credit cards.
- ATM withdrawals are free of charge for debit cards.
- Interest rate –
- With credit cards, you can enjoy up to 50 days of interest-free credits.
- In debit cards, there is no interest rate.
- Use –
- Credit cards can be used in all online stores and merchant outlets.
- Debit cards are not always applicable on some online portals and websites.
- Annual subscription –
- In credit cards, annual fees may or may not be charged.
- In debit cards, there is no annual fee charged.
- Eligibility criteria –
- Credit cards require you to meet several eligibility criteria like monthly income, credit history, residential area, etc.
- Debit cards do not require any eligibility criteria. All you need is a bank account with a certain minimum balance.
Credit card interest rate:
Credit card interest rates are also called Financial expenses. This is a charge that is imposed by the credit card issuer on the credit you have borrowed. Interest rates vary for each issuer and also depend on the type of card you have chosen. It is therefore important that you know the interest rate to ensure maximum savings.
The credit card interest rate is calculated using the following formula:
Interest per month = [(Total number of days × amount of transaction × rate of interest per month × 12 months)] / 365 days
These days, it’s relatively easy to get a debit card or credit card online. Remember to understand how a card works before you choose it yourself. If you choose a credit card, keep the applicable interest rate in mind. You can compare credit / debit cards from different issuers to choose the right one for you.