Debit vs credit card

Credit Card Nigeria

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Posted by on Sunday December 4, 2011 11:46:40:

We often hear a lot about these cards and at times they get used interchangeably, but what's actually difference?

A debit card has the word debit which simply means to take something from you. It means that you are the rightful owner, you own it and for you to be debited means you are giving out of your possession. That's what debit cards really do - They are cards that are linked to our bank account or funds in such a way that it allows us to make payments of withdrawals from what we already own. So one would not be taking up debt or overspending whenever he makes use of a debit card. So in this circumstance, the bank is the debtor and we the creditor. The bank or debit card issue technically are holding our funds for us.

A credit card on the other hand allows the user to have access to credit or funds that he doesn't really own. So he gets a sort of loan by means of a credit card. One you have a credit card, you can make a lot of payments without having to use your money. In this case, the bank is the creditor and you the debtor.

So note the difference with the two, for debit card, the bank is the debtor and allows us access to our funds which also earn interest but for credit cards, the bank is the creditor who also allows us access to their own funds for credit.

Other features
Credit cards charge us interest while debit cards earn us interest
- Debit card funds are limited to the amount we contribute
- Debit cards help us work on a budget
- Credit cards offer access to a larger pool of funds
- Debit cards encourage moderate spending
- Credit cards allow us to easily borrow from the bank and return back without even paying interest in some cases
- Credit cards allow us to make immediate payments for things we really need and repay back gradually.


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