According to a report by Medianama, the number of transactions using credit cards saw a growth of 23.2% between February 2018 and February 2019, whereas the same for debit cards stood at 22.8%. During the same period, the amount transacted using credit cards grew at a rate of 28.8% surpassing the amount transacted through debit cards at POS terminals that went up by 22.8%. This competitive growth in credit card usage over time has eliminated the pre-existing concept of India being predominantly a debit card market.
Such growth in credit card usage shows the popularity of these cards in the Indian market and hence supports the fact that a more individuals apply for credit card nowadays. Subsequently, every individual who opts for credit and debit cards should be well aware of its features to make its best utilisation.
Difference between credit card and debit card
A debit card lets customers use the amount available in their savings account utilising the plastic card issued to them by financial companies. Credit cards, however, offer a pre-determined credit provided by the issuer that can be used for purchases and transactions by the cardholder. While both are used to make payments at POS terminals, online merchant sites, and to withdraw cash, the major difference between credit card and debit card is as follows –
● Build credit history with credit card
Individuals can use a credit card to improve their credit score. Making full payments of the bill and on time can give a boost to their present CIBIL score. Debit cards have no impact on the CIBIL score of an individual as they are not credit-based financial products.
● Welcome bonuses and reward points
It is a distinct feature of credit cards that aren’t available with debit cards. Financial companies offer some reward points as a welcome bonus to customers depending upon their eligibility. With credit cards like Bajaj Finserv RBL Bank SuperCard, customers can save up to Rs.55,000 annually.
Credit and debit cards both come with the feature of reward points to attract users into making purchases. They can make transactions and earn such points. Generally, credit cards offer higher reward points. There are many things to do with credit card reward points like earning cashbacks, qualifying for gift vouchers, availing discounts, etc.
● Online fraud protection
Credit cards provide robust security to customers with features like online fraud protection. Such features help mitigate threats of cybercrime and help an individual financially. An unauthorised transaction made on a debit card cannot be immediately retracted. Nevertheless, customers can raise a complaint against the fraudulent transactions made using their credit card and can evade from paying for them.
● Convert big purchases into easy EMIs
While debit cards don’t come with the feature to convert purchases into EMIs, users can easily convert the purchases and transactions above a certain threshold as mentioned by the issuer into convenient estimated monthly instalments (EMIs). Most individuals apply for credit card to acquire these seamless and convenient features.
● Apply for an emergency loan
Credit cards allow customers to apply for an emergency loan in case they need financial assistance. Customers can avail a loan using their credit card from the available credit limit and repay it conveniently.Further, non-banking financial companies like Bajaj Finserv makes the process of availing credits easier with the pre-approved offers. Such offers are available on multiple financial products including credit cards as well as home loans, personal loans, and business loans, along with others. Customers can check out their pre-approved offers by submitting their name and contact number.
Other features of credit card and debit card
Some other features that credit and debit card both provide to its customers are –
● Cash withdrawal
Like debit cards, credit cards can also be utilised to withdraw cash through ATM. They can withdraw funds against a specified processing charge and interest rates, if applicable.Since individuals today rely more on making payments via online modes and at POS terminals, credit and debit cards are vital financial tools and products. Hence, having a thorough knowledge about the two will help customers know about the associated benefits, and they will be able to apply for credit cards in a better way.