Plastic money includes both credit and debit cards, and while bank account holders get a debit card by default, credit cards must be applied for. It stands to reason that people get confused between credit cards and debit cards, and the difference between credit card and debit card use must be understood.
How Credit & Debit Cards are Different from an FD
To know how credit cards and debit cards differ from an FD, you should understand the differences between them before you get a credit card, one of the best places being Finserv MARKETS to get one. Here are key differences:
- Approval – You get a debit card when you open a bank account. A credit card must be applied for.
- Eligibility – You can get a debit card by being eligible automatically, with a bank account. For approval of a credit card, you must fulfil eligibility criteria.
- Usage – A debit card is used for purchases and the money is debited from your account instantly. You don’t need cash in the bank while you swipe credit cards as you have a free credit period (month or more). If you get a credit card, you can use it without pinching savings.
- Rewards – Debit cards do not earn you rewards while you spend, whereas credit cards get you rewards and benefits like cash back every time you swipe cards.
An FD, firstly, is not a payment tool, like credit and debit cards. Second, it is a form of investment for a stipulated period (tenure) in which funds earn interest.
Table of Comparison
Here is a table showing how credit and debit cards differ from an FD:
|Credit Card||Payment Tool (with free credit period)||Payment without cash|
|Debit Card||Payment Tool (instant cash debit)||Payment without cash|
|FD (Fixed Deposit)||Investment Instrument||Earns interest, saving money over fixed periods|
Pros & Cons of Debit Cards, Credit Cards and FDs
After learning how each financial instrument differs, you should know that you can avail a credit card against FD. Your FD acts as your stable income source showing issuers you are creditworthy. Before you invest, know the pros and cons of each instrument:
- Debit Cards – Debit cards are a good way to pay, provided you have sufficient funds in your bank while using it. In case of insufficient funds, you cannot use it.
- Credit Cards – While you get a free credit period to purchase items, you must settle a bill at the end of it. If you fail to, you will incur interest charges/penalties.
- FD – An FD is a sound way to invest money. However, it comes with a stipulated period and end date before which you cannot remove your principal. If you wish to, you may incur foreclosure charges.
Avail a Credit Card Against an FD
To avail a credit card, you need to display creditworthiness. A way to exhibit a stable income source is to apply for a credit card against an FD. This is an investment that earns returns, translating to a steady income source.
Why Choose Finserv MARKETs to Apply for a Credit Card Online
The difference between credit card and debit card use can urge you to compare credit cards and get the best one at Finserv MARKETS. You get a wide array and can opt for one easily online.