Credit Card vs. Debit Card vs. ATM card – Comparison

First of all,

• A Credit card or Debit card or ATM card is issued usually by a bank. However, some other service providers are also issuing Credit cards nowadays.
• Debit cards and ATM cards are directly linked to your bank account but a Credit card is not linked to a bank account, that means Debit cards are prepaid.
• Credit card and debit card, both are used to make payments to merchants or sellers for goods and services, while an ATM card is only used to withdraw cash from ATMs. So, a Credit or Debit card can be used online or in POS machines in shops and other places to pay.

• Debit and credit cards offer multiple ways to access money without any need to carry cash or a checkbook around. Debit cards are more like digitized versions of checkbooks; they are linked to your bank account, and money is withdrawn or debited from the account as soon as the transaction occurs. Credit cards are different; they offer a line of credit or loan that is interest-free if the monthly credit card bill is paid on time. But if you fail to pay the bill on time, there will be a fine or interest rate applied with the main payable sum. Instead of being connected to a personal bank account, a credit card is connected to the bank or financial institution that issued the card. So when you use a credit card, the issuer or bank pays the merchant on behalf of you and you go into debt to the bank.
• Debit cards and ATM cards can be used to withdraw cash from ATMs because they are linked to your bank account. But on the other hand, usually a Credit card cannot be used to withdraw cash because, yes you guessed it right, they are not linked to a bank account. Then again, nowadays Credit cards can actually be used to withdraw cash from ATMs which is considered as “cash in advance” and those transactions are not free, they are chargeable.
• Nowadays, ATM cards are becoming rare day by day because an ATM card has only one job which is withdrawing cash and a Debit card can serve that purpose. So, the banks endorse Debit cards more.

• Let’s talk about EMIs now. EMI (Equated Monthly Installments) is easily available with Credit cards but not with Debit cards. Then again, nowadays EMI can be availed with Debit cards as well in limited scenarios and the availability varies from bank to bank and merchant to merchant. Banks usually apply interest and other service charges (if applicable) on the EMI sum and the interest rate depends on the bank and the number of installments.
• Yearly charges and other service charges vary from bank to bank for Credit and Debit Cards and for Debit cards, many banks nowadays offer zero yearly charges. “Per transaction” charges for Debit cards are coming down day by day and most banks have already removed such charges.

There are a lots of payment network companies like VISA, MasterCard, Maestro, American Express, RuPay etc. that work with Credit and Debit cards but not with ATM cards because ATM cards are not used to pay online or offline merchants or sellers. The banks work in collaboration with the payment network companies to make the whole payment system going.

Last but not the least, a credit check is required to get a Credit card. The bank will check your credit history and maybe current financial status. It is done from their end to make sure that you are well able to pay the money back after spending it with the Credit card. But a Debit card or ATM card does not require such credit check because it is prepaid.