What is a Debit Card? How does it work?
A debit card combines the features of an ATM card and a cheque. When one pays with debit card, the seller swipes the card through an electronic point of sale (EOS) terminal, which is directly linked with the debit card issuing bank. When this is done, the cardholder’s account is debited instantly. Let’s say you spend Rs 520 at a store, your bank account immediately gets debited for the amount. Debit cards are issued by the banks, but are used at shops / stores.
How much does the card cost?
A debit card is much cheaper than a credit card and carries an annual fee of Re. 100-200. The debit card is still in its infancy in the country. More and more banks have begun issuing the card and its usage is increasing rapidly now.
Difference between credit and debit cards? Where to use them?
A credit card offers you credit for a given period, usually about 50 days, depending on the billing cycle. If one fails to pay the dues by the last date, one is supposed to pay interest on the due amount. But with a debit card, there’s no interest or bill to be paid separately, as the amount is immediately debited from the money lying in your bank account. Also, while applying for a debit card, one does not have to undergo a credit check by the card issuing bank.
All you need is a bank account. A debit card holder needs to have sufficient balance in his account to be able to spend it. Customers tend to use credit cards for high value transactions and debit cards for lower value goods or services.