How does debit card works?

A debit card is one of the most popular electronic modes of payment in this digitalized world. It is a plastic card linked to your savings account and gives access to your account whenever you want. 

The fundamental difference between a credit card and debit card is that;

• In debit card, you spend the money you have in your savings account.
• In credit cards, you get instant credit or loan when you make the purchase, each transaction attracts interest, and it has to be repaid. Credit card bills are generated monthly.

 Although a debit card is not free of charges either. Some of the common fee in regards to a debit card are:
1. After a certain number of transactions in a month, next transactions on other bank's ATMs attract a fee.
2. In case you forget your debit card PIN, then a nominal fee is charged to regenerate it.
3. Banks also charge an annual maintenance fee for the debit card from Rs. 100 to Rs. 500 depending upon the type of card.
4. In case you want to replace the old card with a new one or get the card reissued due to the previous card being lost, then a card replacement fee is charged.

Couple of things that you must be mindful of while using a debit card are that firstly always ensure the safety of the platform before performing the online transaction through a debit card. Next, never cause any physical damage to your card, it may destroy its magnetic chip.
Read more: A Detailed about Debit Card

Debit Card: How does Debit EMI work?

Getting a credit card is not always easy as it requires a good credit score,however, if you want to make the purchase using EMI, you can still do it without having a credit card. You can use your debit card to make any purchase above the balance in your bank account by using the overdraft facility of your debit cards—this facility to make the payment in easy installments known as Debit EMI.

How does Debit EMI work? 1. Several banks such as HDFC, SBI, Axis, ICICI, Federal and Kotak Mahindra allow you to avail the pre-approved overdraft facility on your debit cards. 2. You can use the debit EMI option on merchant websites such as Flipkart, Amazon, Paytm, Makemytrip etc. 3. Banks automatically deduct the EMI every month from the bank account. 4. To avail the debit EMI on your debit cards, you need to make a minimum purchase, which varies from bank to bank. 5. While you can avail the zero-cost EMI, with no extra charges; however, under the zero-cost EMI, banks will automatically adjust the interest amount in the purchase amount. Zero-cost EMI is available on specific products. 6. If you want to close the EMI facility on your debit cards before the determined tenure by paying the penalty charges. 7. You can choose the tenure of paying the EMI ranging between 3 months to 12 months. Read more about: How Does a Debit Card Works?

What are advantages of Debit card and Credit card?

Debit cards 

Debit cards are the cards which are directly linked to an individual's bank account. If there are funds in one's bank account, a debit card will help one to get the money as and when required.

Advantages of debit cards:

1. No extra cost is involved with debit cards. 2. It assists one to keep track of his spending patterns and helps to no spend beyond one's limits. 3. There is no extra cost charged on making payments.

Credit cards: Credit cards are aplastic card issued by a bank and financial institution, allowing the cardholders to purchase goods or services on credit.

Advantages of credit cards:

1. It assists an individual in building a credit card score. A credit score is a three-digit number which helps one to secure loans. 2. Credit cards also provide rewards like free or discounted price in travel, movies and shows.

Features	Credit Cards	Debit Cards
Linked with bank	The issuing Bank	The individual’s bank account.
Credit limit/ spending limit	Credit limit assigned on a monthly basis. Based on credit score	Cash withdrawal and POS limit assigned on a daily basis. Some debit cards do not have that limit.
Interest charged	Charged if in case an individual has not cleared his bill on time	No interest charged

Read more: Debit Card vs Credit Card: Features & Benefits

How Debit Card helps in today's world?

Similar to a credit card, a debit card is also plastic money. You can swipe the card on the POS machine at any retail store and also use it for making online transactions. The debit card is linked to a savings account; thus, the money you spend from it is the money you already have. It also implies that the debit card does not contribute to increasing the debt burden. Although, you can avail overdraft facility on your savings account, subject to certain conditions. 

You can use the debit card on stores which accept card payment by swiping the card. You can also use it for making any online transaction. However, you should be careful with regards to where you are sharing your card’s information as if your card’s information gets stolen, then online thieves can drain your account very quickly. 

The debit card can also be used to withdraw cash from ATMs. However, you can also avoid carrying cash and use the card itself to make the transaction by swiping on the POS machine. Since it uses the money you already have, the debit card does not help in improving bad credit. 

In addition, you can also use the debit card to teach kids how to use the credit card. Both these cards have limits; the only difference is that the limit of credit card is much more flexible than that of debit card. The banks have also attached a ‘reward’ system with a debit card. So, if you know where you will be spending your money in future, then you can pick the card that will be most beneficial.

Know more about the details of Debit Card: What is Debit card and how to use it?