A debit card is a payment instrument linked to a current account, giving the cardholder access to the funds deposited in their account. In other words,the debit card is a financial tool that allows access to the account owned by an individual.
Given the large number of electronic devices that allow for bank card payments, more and more people are choosing this method of payment. Generally, paying by card offers several benefits:
- Flexibility – at any time, the client can pay for a good or service using a debit card, whether the transaction occurs physically in a store or online via a platform;
- Security – banks’ systems are designed to protect transactions (e.g., using a password before payment);
- Payments can be made directly via phone, smartwatches, etc.
As mentioned, most people choose to pay using a card, and most often they use debit cards, because the available funds on this type of card belong to the cardholder, originating from various sources such as salaries, scholarships, allowances, pensions, etc.
In addition, a debit card allows direct debiting, meaning that cash withdrawals can be made directly using the bank account of the person wishing to withdraw money.
Debit cards are easy to obtain. In most cases, it is only necessary to complete a bank account application form. This form is provided by the banking institution where the applicant wishes to hold the card.
Credit Card vs. Debit Card
A credit card is, in principle,a shopping card that involves the provision of a line of credit that the cardholder accesses through the card.
Thus, a credit card allows the holder to make purchases using funds borrowed from the bank that issued the card. It is important to mention in this case that the holder of a credit card must repay the borrowed amount along with the interest specified in the bank’s contract.
The main difference between a credit card and a debit card lies in the origin of the money. More specifically, they differ in the source of the funds. So, while the funds on a debit card belong to the cardholder, those on a credit card come from the card issuer.
Another difference between the two types of cards is that credit card holders usually cannot withdraw cash from them, while debit cards can be used by their holders for this purpose.
Therefore, the usefulness of a debit card lies in the ability to withdraw cash from ATMs, while credit cards offer borrowed funds from banking institutions.