Business Studies

Credit card and Debit card explained with their similarities and differences

len Alfred Ajibola - 07th June, 2022 @ 01:27 PM

Topics in Business Studies

Advantages and Disadvantages of Corporations Advantages and Disadvantages of Limited Liability Company Advantages and Disadvantages of Partnership Credit card and Debit card explained with their similarities and differences Business Structure: What is a business structure? Advantages and Disadvantages of Franchise What is a franchise? Types of franchise Corporation explained with its types What is Limited Liability Company? What is Partnership Business? Types of Partnership What is business studies? Concept of business Elements of Management What is Management? Importance of Management Advantages and Disadvantages of Air Transport Advantages and Disadvantages of Rail Transport Cheque explained with its terminologies Cheque: Types of Cheque Cheque: Characteristics of Cheque Advantages and Disadvantages of Cheque What is Advertising? Types of Advertising


Academic Questions in Business Studies

Please check out our Test Your Knowledge page to see all Questions and Answers

An accounting system focused primarily on a balanced debit and credit side is termed _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principle of accounting system

  • F. Balanced accounting system

With regards to money, which of the following statement is incorrect?

  • A. Money is crucial for the survival of every human being

  • B. Money is completely advantageous

  • C. Money is defined as anything that is generally accepted as a medium of exchange

  • D. Monopoly is said to exist when money and wealth exists in the hands of a few

  • E. Excess money in an economy can lead to inflation

  • F. When a person receives money that isn't commensurate with the job he or she had done, then that's underemployment

Which of the following statement is wrong with regards to business?

  • A. Business involves the exchange of something for another thing or money

  • B. Business is an economic activity

  • C. In business, profit goes beyond money

  • D. Businesses do not have social responsibilities to their customers

  • E. The exchange of services is an aspect of business

  • F. Businesses can be affected by government policies

Consumer _____ are the laws and methods put in place by various agencies so that consumers can enjoy maximum satisfaction on the goods they buy and services rendered to them.

  • A. Protection
  • B. Policy
  • C. Rights
  • D. Defence
  • E. Guide
  • F. Safety

Which of the following is not a characteristics of business?

  • A. The buyer and seller must always come into a contract agreement

  • B. Risk from unforseen circumstances is involved

  • C. They are subject to policies made by the government

  • D. All business transaction is aimed at making profit

  • E. It requires a discontinuous transaction between the buyer and the seller

  • F. Investments are required to begin a business

Which of the following is not a Right of Consumer Protection?

  • A. Right to Education
  • B. Right to Choose
  • C. Right to Safety
  • D. Right to the Good things of Life
  • E. Right to be Assured
  • F. Right to Compel

Which of the following is NOT a government agency of consumer protection?

  • A. Ministry of Sports
  • B. Ministry of Commerce
  • C. Consumer Protection Council
  • D. Ministry of Health
  • E. Ministry of Environment
  • F. National Drug Law Enforcement Agent

Define Consumer Protection.

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Credit card and Debit card:

A credit card refers to a card that allows the holder to purchase online goods and services on credit as payment is immediately made by a third party on their behalf. The third party involved in such transaction is the card holder's financial institution.

In simple terms, the user of a credit card buys on credit via the internet (or through a computer system); and the financial institution issuing the credit card pays on their behalf.

It is noteworthy to emphasize that the holder of the credit card must repay his or her financial institution within a stipulated time frame, else they pay interest on the borrowed amount.

You can read on cheques here.

 

A debit card is a card that allows the holder to purchase goods and services online (or through a computer system), with an immediate debit on the holder's bank account. Recall that the term 'debit' refers to the deduction of money from an owner's account just after a purchase or transfer is made.

Please read an introduction to credit and debit cards here.


The image below shows a credit and debit card:

Len Academy: Debit and Credit Card

 

Similarities between credit card and debit card

  1. Both cards are made of plastic with magnetic strips that contains the account details of the holder.

  2. They offer the convenience of not carrying a large amount of money when making purchases.
    You can read on bank notes and coins alongside their characteristics here.

  3. Both cards carry a 3 digit card verification code called 'CVC'. This code can be seen at the back of both cards and may be 4 digits in some cases. Purchases made over the internet will require the CVC code.

  4. Both cards may require payment of fees after purchases have been made.

  5. Both cards are issued by a commercial bank or financial institution.

  6. Both cards have got similar risk when lost or stolen. The first line of action is to immediately block the card through the issuing bank.
    Please read on the agencies of consumer protection here.

 

Differences between a credit card and a debit card

The table below shows the differences between a credit card and a debit card:

 

Credit Card

Debit Card

The holder buys on credit and the bank that issued the credit card pays on their behalf

This holder buys directly with the money in their bank account

The credit card holder does not need to have a bank account with the issuing bank

The debit card holder must have an account with the issuing bank

Interest may be charged on credit card if the holder fails to pay their credit bill within 30 days

A debit card holder may be charged immediately by the issuing bank after purchases are made

The maximum limit of withdrawal on a credit card will depend the credit rating

The debit card holder will continue to withdraw as long as money is present in their bank account. However, daily withdrawal via the debit card is limited to a specific amount

Credit cards may require signature for purchases

Password pins are generally required for purchases with a debit card

A credit card may not be usable where a debit card can be used. For instance, ATMs.

A debit card is usable wherever a credit card can be used

A credit card is preferred for hotel reservations and car rentals because it guarantees for damages. (The bank will pay).

A debit card is preferred if one intends to adhere to a daily financial budget


You can read on the disadvantages of money here.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 10 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Business Studies

The world's 100 richest people earned enough money in 2012 to end global poverty four times over


NOTABLE POINTS IN Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government Agencies

  2. Independent Agencies

  3. Legislation

Please read on consumer protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the government agencies of consumer protection:

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the government agencies of consumer protection here