Difference between a debit and credit card

Posted by Felix Okoli on Thursday August 16, 2012 10:39:59:

In an economy that is gradually going cashless, it appears that card payments have come to stay and we now have them in two types: Debit and credit card

What is the difference between a debit and credit card?
A debit card and credit card are alike in the sense that they are physical electronic cards that can be used to settle bills electronically. However they differ in certain aspects.

A debit car comes from the world debit which means to "take from" or "remove" and so when a debit card holder pays with his debit card, funds are actually removed from an account or fund which he already owns.

A credit card on the other hand comes from the word credit which means to give or offer credit. When a credit card holder pays with his card, funds are actually taken from his creditor's account and used to settle the bills he owes. He doesn't own the money or account from where the money is drawn but is rather indebted to it for the funds that have been withdrawn from it and he is expected to make a repayment later on.

For a debit card holder on the other hand, he doesn't have to repay any funds used in settling bills since he has already paid for it.

A good example of a debit card is the ATM card in use in Nigeria. They are attached to a bank account which is already funded with the holder's money. An example of a credit card in the Nigerian context is the naira credit card which allows account holders to borrow money from the banks in order to settle bills and make repayments later on.

Both cards can be used to make payments at POS machines, withdraw from ATMs and shop anywhere their processor is supported.