The debit card is the most common payment method in France and the European Union. In contrast, credit cards dominate the international market. Therefore, it is important to know how to tell them apart so you can get the most out of your financial activities. In this article, you’ll find key information on these two payment methods, including what makes them different as well as their advantages and disadvantages.

What’s in this article?

• What is a debit card?
  
• What is a credit card?
  
• How are these cards similar?
  
• How can you tell if you have a credit card or a debit card?
  
• Credit card benefits
  
• Credit card drawbacks
  
• Debit card benefits
  
• Debit card drawbacks
  
• How do you get a co-branded card?
  

What is a debit card?

A debit card (also known as a bank card) is a payment card that enables the amount you owe to be withdrawn from your account within 24 to 48 hours after the purchase.

What is a credit card?

With a credit card, your spending is debited later. There are two types of credit cards: charge cards and revolving credit cards.

Charge card

With a charge card, the balance of your expenses builds up in your account for a defined, set period (generally one month) before the total amount is withdrawn at the end of an agreed period. In this case, your banking institution loans you the money for your purchases, and it’s then your responsibility to reimburse the full amount at the end of each fixed period. You can find the exact date of when your account is debited in your account agreement.

It’s worth noting that charge cards also let you withdraw cash (instant debit and not delayed debit).

Revolving credit card

A revolving credit card is just a line of credit set up with a bank, a big-box retailer, a mail-order retailer, or even an institution specializing in consumer credit. It gives you access to a cash reserve that you can draw from at any time and offers you much greater repayment flexibility (for example, you can choose to postpone your monthly payments). Your account is debited each month until the full borrowed amount is repaid, including the fees. Note that this type of card normally has high interest rates (between 2.9% and 22.07% of the amount spent).

Another important point to note is that the credit line replenishes whenever you make payments, so the money you pay becomes available to borrow again.

How are these cards similar?

Credit and debit cards both have the same function, allowing you to withdraw cash, make card and online payments, and make international payments. They also have a usage limit set by the banking institution. Since the limit varies depending on the bank and the type of card, you should review your account agreement to learn about your card’s limit.

You can get a credit or debit card that functions on the Visa and Mastercard networks as well as on the “Cartes Bancaires” (CB) network in France. More than 95% of CB cards are Visa or Mastercard co-branded, which makes card processing easier.

Learn more about Cartes Bancaires cards.

How can you tell if you have a credit card or a debit card?

Since 2016, all payment cards issued by banking institutions must indicate whether they are a debit or credit card, as part of the EU Regulation 2015/751. You can find this information noted on the back of the card.

Credit card benefits

A credit card is particularly advantageous when making major purchases, since you are not limited by the funds available in your bank account. It also can let you keep all your spending in one place.

In addition, by making your monthly payments on time, you improve your credit rating and increase your chances of being approved for future bank loans (a high credit score shows the bank deciding on the loan that you know how to manage your debt).

In general, credit cards can offer you discounts (through points or money) when you make certain types of purchases. Credit card holders often receive offers and can take advantage of events organized by the card’s banking establishment.

While each bank account can only issue one debit card, you are allowed to have several credit cards. In this way, you’re not restricted by the credit limit of just one card. With many different credit cards on the market, you can easily find options that suit your financial needs.

Credit card drawbacks

Credit cards often have an annual fee and accrue interest. Also, certain card companies require a minimum balance to use them.

Even though credit cards offer a certain amount of financial freedom, you need to make sure you don’t become overburdened with debt. A late or missing payment can lead not just to increased fees, but it can also hurt your credit rating.

Debit card benefits

A debit card helps you limit your expenses to the available amount in your bank account, which helps you spend more wisely and keeps you from living beyond your means.

Additionally, a debit card doesn’t accrue interest or have processing fees. However, you may have to pay fees when you withdraw cash.

Debit card drawbacks

Debit cards cannot be used for certain purchases. For example, a debit card may be rejected during a car rental. In addition, a debit card does not give you a cash advance. So, you are ultimately limited to just the money you have. Debit cards also don’t offer discounts.

How do you get a co-branded card?

You can get a debit or credit card created in partnership with a business, an association, or another establishment. These cards are co-branded with the establishment’s commercial brand and can give you access to loyalty programs. To obtain one, you need to contact the card issuer (i.e., the partner establishment).

Alternatively, Stripe Issuing offers businesses the chance to create a co-branded card program perfectly adapted to the business’s needs. For example, Issuing lets you set your own spending limits and customize the card’s design. These cards allow your customers to, among other things, hold funds and make payments. To learn more about how Stripe can help you create cards that match your brand, contact one of our experts.