Credit Cards Versus Debit Cards

When you use your credit card, you are actually borrowing money which is made available to you by the financial institution. What actually happens is that the financial istitution or the bank will pay the debt to the vendor & in return you will pay the money back to the institution at any interest drawn on the amount you borrowed. You can also say that a credit card is just like an instrument that allows you to borrow money for paying for your purchases. Whereas, your debit card is just another way to access your bank account anytime that also from anywhere. Debit cards can also be used to carry out purchases. When you payoff using your debit card, you actually allow the vendor to electronically transfer a certain amount of cash to his account from your personal bank account. So you are actaully paying for your purchases without involving any visible cash. Is't it great. Well there are more basic differences between the two types of cards.

1. First of all, know the payment limites. In case of debit cards you can't make payment for more than the balance available on your account. Whereas, you can spend as much as you want but you should not cross the limit specified by the card.
   
   
2. Second is the identification proof. You actually do not require any sort of identification proof except your ATM pin in case of credit cards. But, in case of debit card a sample signature is also a must.
   
   
3. For purchases made on debit cards no repayment is actually required but, the same is not true in case of credit cards.
   
   
4. Theres no charge involved in case of Debit card transactions, but credit card transactions do involve some fee, and the rate of interest chargeable on the amount not repaid on time is exorbitantly high.
   
   
5. If you use your credit card wisely it will generate a positive impact on your credit score, whereas debit cards have a impact on credit scores.
   
   
6. If you make payments made through debit cards you are not entitled to avail any special perks or privileges. But in case of credit cards you may win rewards.

Well, i have listed few differences. If you find some detail or any point missing, do comment.