Debt is something that a person owes and can be synonymous with “debt.” In the case of cards and payment methods, the debit is an amount charged and withdrawn from the account of the holder of the money.
Credit, on the other hand, is when a certain amount of money is transferred to an object, and a credit card is one of the ways that value is used.
Debit Card Vs Credit Card – Differences:
|Debit Card||Credit Card|
|Definition||Debt, something owed by an individual. In the case of current cards and payment methods, it also means an amount withdrawn from the money holder’s account immediately when making a purchase or paying for a service.||Trust placed in someone; If this trust is provided by the provision of a monetary amount, the amount in question is called “credit.”|
|Examples||Purchase of a cell phone with payment of the full amount through a bank card: debit made to the carrier’s account; The client is in debt to the bank for having used the overdraft: the individual is “in debt.”||Credit card, payroll loan, housing loan, student loan, business support credit, working capital financing, Leasing for legal entities, etc.|
What Is The Difference Between Debit Card And Credit Card?
What is debit?
If we speak in the original sense of the word, debt is a debt incurred by someone. But there is also the meaning that comes with the payment method, where an amount is automatically debited from an individual’s bank account.
Therefore, if the subject opens an account and deposits money in it, the amount will be available to be debited when making a purchase or paying for a service.
Therefore, you can purchase goods by cashing them directly into your bank account.
However, if you owe the financial institution, you will be “in debt.” That is, you will be charged for money already used and the account did not have funds.
Examples of debt
- A person decided to save as much as he could and managed to save R$ 50,000 to buy a car for the same price. When making the purchase in cash, he will be using a debit to make the payment.
- When making purchases at the supermarket, for a total of BRL 150, the individual, who had BRL 500 in his account, debits his card. In this case, as the money did not need to be entrusted to him by a bank, since he already had the amount. Then a debit is made.
- If someone lent R$ 1 thousand from the bank (this amount is characterized as a “credit”), but did not pay the installments or the total amount owed, the client will remain “indebted” to the institution. That is, in debt.
What is credit?
In the origin of the word, a credit means a trust placed in something or someone. In this sense, if the subject is entrusted with an amount of money, he is receiving a “credit” from the institution where he made the request.
In the financial market, credit also refers to a transaction. This is when you can spend the money available through credit (trust). Once the accredited person agrees to take care of the purchase expenses, and possible interest, without having to have the money at the time.
In current times, when applying for credit, several consonants are evaluated. After all, everything will be negotiated on the basis of trust. The bank or financial institution that grants the credit expects full reimbursement, or more, of the money made available.
To clarify the difference, a credit is the origin of the money to be used, if it was contracted based on a trust. A debt, in addition to meaning “debt”, is the use of money in the possession of the buyer.
Examples of credit
So that the consumer has an amount of money available at the time they need it, Brazilian banks offer several types of credit.
Some are intended for immediate purchases, which do not have high values and are made daily. Others are for larger value purchases. These can take years for the applicant to pay the debt with the financial institution, as is the case with housing or student loans.
Among the most common types of credit are:
Those who have a credit card are subject to a limit imposed by the bank, and this limit is signed at the time of signing the contract with the financial institution. The amount made available is called “plafond”.
Regarding the credit limit, the bank will do an exhaustive analysis of the applicant’s life. Remember that financial credit is granted on the basis of trust. Therefore, banks follow strict standards when they decide to make a sum of money available to someone.
To do this, your salary, housing expenses or other bills you may have will be looked at. In addition to your consumption profile (if you spend a lot or little and what you spend your money on).
Another point that is verified is whether the applicant has overdue debts with another financial institution, which is a key point for the credit to be approved.
The cards are very practical in everyday life. Depending on the day you make the purchase, you may have up to 40 days to make the payment. However, because it has very high interest rates, having a credit card and using it indiscriminately can lead to debt.
If you need to use credit to renegotiate debts, it is good for the consumer to be aware! It’s time to take stock of your financial life. This is to avoid falling into a vicious circle, which tends to worsen if the debtor does not re-educate himself financially.
How does the debt renegotiation credit work?
If an individual has many bills and has fallen behind on payments, causing interest to increase the amount owed, credit is used to pay off those debts.
In this way, the applicant now has only one debt to pay, being the credit that financed the payment of previously contracted debts. Thus, an individual can recondition debts to a new payment method.
It may seem confusing to go into debt to pay off debt. But in many cases the interest charged by the financial institution may be less than that charged on the original debts.
The payroll loan or loan is well known among public servants, retirees or INSS pensioners.
Being in a position of stability, financial institutions assume that applicants for this type of credit will have the money to pay the commitment.
That is, once the payroll loan is made, the payment of the installments is debited directly from the applicant’s payroll.
With installments to be deducted from the debtor’s salary, the interest may be less. Banks are assured that payments will be made as soon as the debtor receives his salary.
However, there is a limit on the amount of credit (loan) that will be granted to the applicant. The money cannot exceed 30% of the salary, with an additional 5% available in case the applicant wants to have a payroll deductible credit card. The invoice is also deducted from the payroll.
Other types of credit
In addition to those mentioned above, there are also several types of credit available in the financial market. Of course, all of this is conditional on the assessment of how reliable the individual is with respect to paying their debts.
If you want to buy a property or renovate your residence, there is a housing loan (real estate) . To finance the payment of higher level courses, there is student credit . There’s even credit for travel and exchanges !
For companies, there is support credit , which is used either to open a business or to help the organization pay off debts. In addition, there is also working capital financing , to feed a company’s cash flow.
There are still several other options for companies or individuals, satisfying the most diverse current financial needs. Many banks even have personalized loans. Thus, each individual can have a type of credit that fits in their pocket and can be used for a specific purchase or debit.
Debit and credit in accounting.
In the context of accounting, the charge occurs when a resource is applied. Thus, in an accounting table, it is the entry made in the Debit column , in order to increase the value of an account if it is an asset or a right. If the account is a liability, the entry serves to reduce its value.
Therefore, Credito has the opposite purpose. The term also appears as a column in an accounting table where an account is recorded. This serves to increase its value in the case of an obligation, and decrease it in the case of goods or rights.
To clarify: an account in the accounting field represents assets, rights and obligations, being part of the assets of an organization.
An account also contains information about the company’s income and expenses and can be classified as:
- Equity and/or equity
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