A debit card is a payment card that allows you to access funds from your bank account electronically to make purchases or withdraw cash. When you use a debit card, the amount of the transaction is deducted directly from your available balance in the linked bank account. Meezan Bank Visa debit card is an example of a debit card.
Key Features of a Debit Card
Here are some key features and functions of debit cards:
Access to Funds:
Debit cards provide convenient access to the funds available in your bank account. You can use a debit card to make purchases at point-of-sale (POS) terminals and online retailers or withdraw cash from Automated Teller Machines (ATMs).
Linked Bank Account:
A debit card is typically linked to your bank account. It allows you to access the funds available in that account for transactions. The card is associated with a specific bank or financial institution.
Debit cards often require a Personal Identification Number (PIN) to authorise transactions. You enter your unique PIN at the time of making a purchase or withdrawing cash to verify your identity and ensure secure transactions.
Debit card transactions are typically recorded in your bank account statement, allowing you to track your expenses and monitor your spending.
Many debit cards are issued with international payment networks affiliations such as Visa, Mastercard, or UnionPay. This enables you to use your debit card for transactions abroad or with international merchants.
Debit cards often come with security measures such as chip-and-PIN technology or contactless payments (e.g., NFC) to protect against fraud. Some banks also offer additional security features like transaction notifications, card blocking, or two-factor authentication for online transactions.
Daily Transaction Limits:
Debit cards may have daily transaction limits set by the issuing bank to safeguard against unauthorised usage. These limits may vary depending on the bank and the type of account.
What is a Credit Card?
A credit card is a payment card that allows the cardholder to borrow funds from a financial institution, typically a bank, to make purchases or access credit. Unlike a debit card that uses funds from your own bank account, a credit card allows you to make transactions using a line of credit provided by the card issuer. Silk Bank Platinum credit card is an example of a credit card.
Key Features of a Credit Card
Here are some key features and functions of credit cards:
Each credit card has a predetermined credit limit, which is the maximum amount of money you can borrow on the card. The credit limit is set by the card issuer based on factors such as your income, credit history, and creditworthiness.
When you use a credit card to make a purchase, you are essentially borrowing money from the card issuer to complete the transaction. The borrowed funds accumulate as an outstanding balance on your credit card account.
Monthly Billing Cycle:
Credit card transactions are typically grouped into billing cycles, usually one month long. At the end of each billing cycle, the card issuer sends you a statement detailing the transactions made during that period, the outstanding balance, and the minimum payment due.
The credit card statement specifies a minimum payment amount that you are required to pay by the due date to maintain your account in good standing. Paying only the minimum payment allows you to carry the remaining balance forward, but it may also accrue interest charges.
If you carry a balance on your credit card from one billing cycle to the next, you will usually be charged interest on the outstanding balance. The interest rate, often referred to as the Annual Percentage Rate (APR), varies among credit cards and is disclosed by the card issuer.
Credit cards offer a revolving credit feature, which means that as you repay the borrowed funds, your available credit is replenished, allowing you to borrow again up to your credit limit. This makes credit cards a flexible form of borrowing for ongoing expenses.
Rewards and Benefits:
Many credit cards come with rewards programs, such as cashback, travel points, or discounts on specific purchases. Additionally, credit cards may offer benefits like travel insurance, purchase protection, extended warranties, and access to airport lounges, depending on the card issuer and the specific card type.
Credit History Building:
Proper usage of a credit card, such as making payments on time and maintaining a low credit utilization ratio, can help build a positive credit history. A good credit history is essential for future loan approvals and obtaining favourable interest rates.