Introduction
There is always confusion to a person regarding the difference between a credit card and a debit card. Which one to use in which situation so today I am going to clear the problem regarding the difference between credit cards and debit cards. So let's deep dive into it. First, let's start with the definition.
Credit Card
A credit card is a card issued to you to make daily life purchases, but you need to provide some money for your payment to the card issuer and the time you take to do the payment to the card issuer determines your credit score which helps you in getting fast loan/debt and discount in other purchases.
How Credit Card Works
As described above in credit cards there is a middle Man/Agency in your purchases so you can make credit card payments even when there is no balance in your main account. So let's talk about the functioning of the card. Let's divide them into points for better understanding.
1) You make a purchase.
2) The request goes to the Middle person/Agency.
3)They make the payment through their account.
4)You need to give the money from your bank account to them with interest. (Depends upon your transaction value)
5) The gap between the transaction and the time you give the money determines your Credit Score
Why does Credit Card doesn't function in some Cases
In some cases, your credit card may stop functioning in some rare cases it is due to suspicious transactions in a short time. (It's very rare).
Debit-Card
It is a transactional card directly linked to your bank account from which you can do daily transactions.
Its functioning is very simple now let's talk about its functioning.
Working
1)You make purchases.
2)The request goes to the bank.
3)If there is money in your account then the transaction is done else not done.
When to use Credit-card and debit card
Now you know the difference between credit cards and debit cards let's talk about when to use them
A credit card is used for small purchases so that you can build your credit score. The debit card is used for other small and big purchases.
(Note: Don't use the credit card for the buying process of cars and houses. You need to pay more interest.)
Conclusion
Now you know the difference between credit cards and debit cards, And when to use credit cards and debit cards.
Thank you!!!