Beyond Cash : Basics About Credit And Debit Cards

Moving from paper currency (cash) to a plastic one (debit and credit cards) is actually a convenient and smart move. Here’s why:

They are Safe, they are Convenient and they are Quick to use.

Debit card is a plastic card through which when the payment is done, the amount is immediately reduced from the client’s bank account. Credit card on the other hand works in such a manner that a client makes purchases using the card and at the end of the month she clears all the bills made through that card.

1.) Eligibility Criteria:

These cards have certain eligibility criteria. The criteria varies from bank to bank but the general conditions for debit card holders are that a person should have a certain amount of balance in his savings account (amount specified by each bank is different).General conditions for credit card holders are:-

  1.  A person should have a decent salary or should be stably self employed.
  2.  A person should be a citizen of India.
  3.  He/she should be able to pay his credit card bills regularly.
  4.  He/she should have a good credit score for maintaining the credit card he has been offered.

2.) Credit Score and Credit History:

Credit score is the score of your payment of bills regularly and on time. Every time you fail to pay your bill on time, your credit score goes down. Credit history is the track record of your payments in the past. If you maintain good impressions on these terms with the bank, the bank may even give you perks and offers on the card.

Debit card numberThis 16-digit number is unique to your card. It is different from your checking account number.

3.) Card Number and Pin Number:

Each card has a particular card number. It belongs to that card in particular and all the transactions are done through it. Also, every card has a unique password called the PIN number. This number should not be shared with anyone as its confidential. By putting this number in a card machine you can access your account and perform any transactions. If the PIN number is leaked, someone else can use your money through it.

4.) Whats better? A debit card or a credit card?

People with less self control prefer a debit card and not a credit card because in a debit card the money being reduced from your account after every purchase and it reflects in your account balance. But in the case of credit card, that does not happen. Your bank balance is not reduced at the time of purchase. As a result, one is not aware of how much she spends until the end of the month. And that’s why self control is really important for credit card users. But credit cards aren’t entirely bad  because online websites give benefits to specific card holders and they also give loyalty points for swiping.

What is the meaning of ATM

5.) Which card can you use at an ATM?Whats An ATM- (1)

You can use both a debit card and a credit card at ATM’s. However, credit cards are not really recommended as the card may belong to a different bank and that bank might charge you a high rate of interest for that withdrawal in the coming bill. The same works for debit cards too, but most banks offer a limited number of free withdrawals. For e.g. If I use an Axis Bank debit card at an HDFC ATM, for the first 3 withdrawals in the month I will not be charged any amount, but after the 4th withdrawal I will be charged Rs. 20  for every withdrawal.

6.) Minimum Amount Due:

If you do not pay your credit card bill on time, a high rate of interest is charged. The more you delay your payments, the higher will be your interest charged will be higher. There is a concept of ‘minimum amount due’ i.e the minimum amount of the bill to be paid by the payee as a must. But after that, the interest is anyway charged upon the late payee. So one must ensure that the bill is paid in full and on time.

Credit cards and debit cards are an easy and smart way of purchasing.You can easily avoid the burden of carrying physical cash with you wherever you go with the help of such cards.


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