Difference between credit and debit card

The main differences between these two types of card and their recommended uses

Maybe you even have several of each of them; they are part of your everyday life and you use them daily, to pay for more and more things… But do you really know the difference between one and the other?

Credit or debit: it depends on how we pay the balance of the debt generated by our purchases.

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1. The method of payment. With a debit card, the amount is charged directly to the card holder's checking or savings account. Thus, they only allow a charge up to the limit of the funds of the account.

On the other hand, with a credit card you can pay even if you don't have funds, since you can postpone the charge until the following month. In this manner, the card holder takes out a debt with the bank (for that reason, before granting a credit card, the bank studies our viability, making sure that are creditworthy). Even so, the credit card has a limit.

The credit can be “paid back” in three ways: either at the end of the month (a set day of the month following the month the purchase is made), or through a percentage (which is paid every month) or a fixed installment (this format is known as revolving payment, and consists of paying a pre-set fixed amount).

2. The ability to finance. Credit cards let you finance your purchases. Thus, they allow you to pay in installments and to make your purchases without the need to pay out the total of the payment. Let's say that, as its name suggests, it implicitly involves the granting of a loan by the bank.

Debit cards, meanwhile, are a means of payment in themselves: the amount is directly charged to the card holder's account, and is deducted directly from the balance.

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3. Interest. A credit card charges the card holder interest when withdrawing money or splitting the payments into installments. These interest charges are not frequent in debit cards.

As you can see, the differences are considerable and they vary depending on the preferences and needs of each consumer. If you have questions, don't hesitate to ask us; at BBVA we have the one which is best for you.

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