Difference Between Credit Card & Debit Card
15 May 2019
4 Differences between Credit Card and Debit Card
When you open a bank account, you are provided with a cheque book, a passbook and an ATM-cum-debit card, also known simply as a debit card. After you’ve held your account with the bank for some time, the bank may even offer you a credit card. However, many people are often confused about the difference between debit and credit card and often assume them to be the same. So, we’ve listed the differences to help you understand. Let’s start with understanding the meaning of each card.
What is a debit card?
A debit card is a card that is linked with your savings or current bank account. When you open your bank account, the bank issues a card that you can use at ATMs and PoS terminals to withdraw money or pay for your expenses, respectively. The sums are automatically and instantly debited or deducted from your debit card. Banks provide free debit cards and charge a small annual maintenance fee.
What is a credit card?
A credit card is another type of bank card through which you can borrow money for a bank or financial institution. The issuer provides you with a line of credit, also known as a credit limit. This limit is determined based on your income and can be increased from time to time. The issuer bills you for your credit card expenses, and you need to pay them off by a stipulated date. If you fail to repay the sums borrower on credit, the issuer levies an interest rate on the money borrowed.
Credit card vs debit card
Having explained the meanings of credit and debit cards, let’s find out what is the difference between credit card and debit card. They are as under:
- Bill vs account statement
People who have a credit card are sent a bill for the expenses incurred on the card each month. The issuer sends a bill explaining the minimum and total sums due. In the case of debit cards, the account holder can directly access the savings account to see the expenses incurred.
- Linking the card
The debit card is linked to your savings account, whereas the credit card is linked to the financial organisation or issuing bank offering the credit facility.
- Credit vs spending limit
Typically, credit card companies provide a credit limit, and you cannot borrow sums exceeding the credit limit. In the case of debit cards, banks issue daily cash withdrawal as well as PoS spending limits.
- Interest charged
The credit card issuer levies an interest rate if one is unable to repay the amounts borrowed on time. However, in the case of debit cards, money is not borrowed on credit, so no interest is charged.
Apart from the points mentioned above, a significant aspect of difference between debit and credit card is that debit cards are provided free of charge by the bank. In contrast, credit cards may be availed through an application or by invitation only.
Computing Your Car Loan EMI Made Easy
Every individual’s journey to buy a car is unique. It begins with where the individual is in his/her career, and the choice of vehicle they want, which is mainly based on why they want the car. During the process, they also focus on how they can get a car loan that suits their requirement.
When you, as an individual are considering a car loan, you are likely to do your due homework in checking for affordability and the loan tenure among other factors. While it is essential to go for a car loan from a lender who has banking expertise in the sector of car or auto loans, so you get the best rate and comfortable repayment options, you can also use the EMI calculator like the Bank of Baroda’s Car Loan EMI calculator that will help you make a well-informed choice in picking your car loan.
In using a car loan EMI calculator, you need to key in three basic variables- the loan amount you are likely to need, the tenure or the repayment period that suits your finances and the rate of interest. Now, the rate of interest is what you get from the bank, while the other two are the ones you can play around with on the calculator. Here is why using a car loan EMI calculator works.
If EMI is more:
You can pick a longer loan term or
You can make the loan amount smaller
If you find the EMI is coming out to be lower, then you can plan for a larger loan value or a shorter loan term.
You can also use the PMT formula on Microsoft Excel to calculate the EMI (Equated Monthly Instalments), where PMT is your EMI, Rate is the rate of interest, Nper or number of periods is the total number of payments for the loan and Pv is the loan value or the principal. The formula is PMT (Rate, Nper, Pv).
You can keep trying the formula for various combinations and then choose the one with the lowest EMI, though this is a roundabout approach prone to human error.
Bank of Baroda offers car loans and has a wide range of benefits, irrespective of your loan amount or type of vehicle.
With a BoB car loans, you can ride home your dream car in a short period of time. Our loans are designed for those who may be unable to purchase a private vehicle due to paucity of funds.
You can benefit from quick processing, minimal documentation and speedy fund disbursal. Additionally, our loan borrowers are not required to pay foreclosure charges or pre-payment penalty, nor do they need to pay advance EMIs.
With higher limits on the car loan amount, you can avail loans for new cars based on your eligibility. So, if you have always had your eye on a luxury car, our loan can take you one step closer to your dream.
Also, say goodbye to down payment worries, as you can get up to 90% financing on the car’s on-road price with Bank of Baroda’s auto loan.
Bank of Baroda offer attractive interest rates on loans to all our customers based on their credit scores. Additionally, existing home loan borrowers with a good credit history enjoy a concession on their car loan interest rate.
Does a Co-Applicant's Income Improve Your Chances of Getting a Higher Home Loan Amount?
Does a Co-Applicant's Income Improve Your Chances of Getting a Higher Home Loan Amount?
A Home Loan is considered a once-in-a-lifetime opportunity for many people. That is why it would help to maximise your potential loan amount. The best to go about is to opt for a joint Home Loan. Let's find out what is a joint Home Loan and how you can improve your chances of getting a higher Home Loan amount.
What is a Joint Home Loan, and What is a Co-Applicant in Home Loans?
A joint Home Loan is one that you can take along with another applicant or a co-applicant. A co-applicant is simply an additional applicant who is just as involved in the underwriting and approval process of the same Home Loan. When you take a loan with a co-applicant, it is deemed as a joint Home Loan.
A co-applicant may be named as the secondary applicant on the joint Home Loan but may share the same loan repayment responsibilities and benefits that go with a Home Loan. Co-applicant may or may not be joint owner of the property. However a joint owner has necessary to be a co applicant even if he / she is not having any income (e.g. In case of house wife). If joint owner is not having any income, then eligible loan amount would be calculated solely on the basis of income of main applicant.
Having a co-applicant on your Home Loan can also increase your chances of getting the loan approved. Furthermore, it also helps you procure a higher loan amount to buy the house of your dreams. However co-applicant must be your close relative.
Benefits of Having a Co-Applicant in Home Loan
Having explained what is a joint Home Loan and the definition of a co-applicant, let's take a look at a few benefits of having a co-applicant on your Home Loan.
The bank considers the income of both applicants
When you apply for a Home Loan, the bank considers various factors that can affect your eligibility. This includes your income, outgoing expenses, credit scores, and so on. While you may be eligible for the loan, you may not get a higher loan amount as the sole applicant. But when you apply for a Home Loan jointly with another applicant, the bank also considers their income. A higher income typically results in a higher loan eligibility amount, enabling you to buy a better property without compromising.
A joint Home Loan reduces your loan burden by half
Another advantage of taking on a joint Home Loan is that your loan burden is reduced considerably. You and your co-applicant can devise a strategy that distributes the loan repayment equally. This way, if either of you is faced with unpredictable circumstances leading to a loss of income, the other can ensure that EMIs are paid on time. Doing this ensures you never default on your EMI payment.
Conclusion: Now that you know what a co-applicant is in a Home Loan, you should consider applying with one. A co-applicant reduces your loan burden and shares financial responsibility.
So are you looking for a Home Loan? Apply now with Bank of Baroda