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Credit & Debit Cards

A credit card allows users to borrow funds from a financial institution like a bank, while a debit card directly deducts money from a user's checking account. Credit cards offer benefits like easy access to credit, building credit history, and purchase incentives, but disadvantages include potential debt traps, hidden fees, and high interest on unpaid balances. Debit cards provide alternatives to cash and immediate fund transfers, but have limitations like identity theft risks, transaction limits, and terminal dependency.

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Dhrisha Gada
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180 views3 pages

Credit & Debit Cards

A credit card allows users to borrow funds from a financial institution like a bank, while a debit card directly deducts money from a user's checking account. Credit cards offer benefits like easy access to credit, building credit history, and purchase incentives, but disadvantages include potential debt traps, hidden fees, and high interest on unpaid balances. Debit cards provide alternatives to cash and immediate fund transfers, but have limitations like identity theft risks, transaction limits, and terminal dependency.

Uploaded by

Dhrisha Gada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Credit/debit card transactions

What Is a Credit Card?

A credit card is a card issued by a financial institution, typically a


bank, and it enables the cardholder to borrow funds from that
institution.

What Is a Debit Card?

A debit card is a payment card that makes payments by deducting


money directly from a consumer’s checking account, rather than
on-loan from a bank or card issuer.

Advantage & Disadvantage of Credit Card


Benefits of Credit Cards:
1. Easy access to credit
2. Building a line of credit
3. EMI facility
4. Incentives and offers
5. Flexible credit
6. Record of expenses
7. Purchase protection

Disadvantages of Credit Cards:


1. Minimum due trap
2. Hidden costs
3. Easy to overuse
4. High interest rate
5. Credit card fraud
Advantage & Disadvantage of Debit Card
Benefits of Debit Card:
Prepaid Card 
Nominal fee
Alternative to Cash
Immediate Transfer of Funds
Instant Withdrawal of Cash
Easy to Manage

Disadvantages of Debit Card:


Unprotected against identity
Limit of transaction
Terminal Dependent
Processing and maintenance charge
Limit to fund access
Security threat

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