Debit, Credit Card & Smart/Chip Card

Debit cards offer the convenience of a credit but work in a different way. Debit cards draw money directly from your checking account when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank and it is transferred to the merchants account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through.

A credit card is a card that allows you to borrow money in small amounts at local merchants. You use the card to make your transactions. The credit card company then charges you interest on your purchases, though there is generally a grace period of approximately thirty days before interest is charged if you do not carry your balance over from month to month.

A Chip Card is a standard-size plastic debit or credit card that contains an embedded microchip as well as a traditional magnetic stripe. The chip encrypts information to help increase data security when making transactions at terminals or ATMs that are chip-enabled. A chip card is also referred as a EMV or smart card to.

Reference:

http://www.komando.com/tips/328980/why-theres-a-chip-in-your-new-credit-and-debit-cards/all.

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