Credit card vs. Debit card: The differences


Debit and credit cards are popular payment instruments in alternative to cash. They are different from each other, yet not many people realize the differences.

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Debit card and Credit card: The definition

Debit card is a type of card that allows the cardholder to conduct card transactions within the amount and overdraft limit (if any) available on the card holder's current account. In addition to cash withdrawal function like ATM card, debit card also offer payment function for goods and services at the merchants including supermarkets, restaurants, etc. Upon any withdrawal or payment transaction, your bank account will be deducted immediately and you can check the transaction history in your monthly bank statements. Debit card is also called payment card. There are two types of payment cards, including domestic and international ones, in which domestic payment cards can only be used for transactions within Vietnam while international payment cards can be used to for withdrawal and payment anywhere globally.

With a credit card, the issuing bank will grant the cardholder a credit limit for better controlling their spending. In other words, with debit card, spending and payment occur simultaneously while credit card allows “spend first - pay later” and an interest-free period applied to all payment transactions of up to 45 days.

Application procedure

In order to be approved for credit card issuance, in addition to identification documents such as ID card, passport, temporary residence card, fees related to card issuance, customers need to provide evidence on their financial capacity to ensure solvency and make a basis for banks to grant credit limit. Customer's credit history is also a factor that influences credit scoring and customer ratings. Evidence of financial capacity and criteria for credit scoring and customer rating also vary among different banks.

With debit card, the customer's credit history does not affect the bank's approval of card issuance, thus the procedure is very simple. Customers only need to go to the bank to open a current account, register for card issuance, pay related fees (if any) and wait for card delivery.

Functions, incentives and scope of use

Debit card can be used for withdrawal, transfer, savings, phone top-up, payment, etc. Credit card allows installments in addition to such basic features as payment and withdrawal.

Debit card often charge lower fees than credit cards and do not incur interest/penalty in case of late payment as prescribed by the bank. To encourage and promote card-based payment, banks now offer a lot of promotions to customers such as cashback, gifts when opening a new card or discounts when shopping online, shopping at super market, buying air tickets, buying electronics ... and perform card-based payment.

Currently, BIDV is providing a full range of debit and credit card products to suit the diverse needs of different customer segments such as cards for students, office employees, young people, etc.

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