Money And Credit

Use app

Common Misconceptions

4 min read

- Clear the fog of misconceptions and get a clarity of concepts.

Money and Currency

Money:Money is an accepted medium of exchange for goods and services, and it has value of its own. Money could be in form of demand drafts, bank savings, electronic money, etc.
Currency: Currency is one of the forms of money which people keep in their pockets as a medium of exchange. Currency is usually in the form of hard plastic, paper or metal. Currency do not have value of its own.
Example: paper notes, coins, etc.
Line of difference: Currency is one of the forms of money.

Cooperative Societies and Self Help Groups

Cooperative societies: The word 'cooperative' means working together for common purpose. A cooperative is an association of people who come together with the motive of the welfare of the members. It requires at least 10 adult members. It needs to be registered under the Cooperative Societies Act, 1912.
Self Help Groups: A typical Self Help Group (SHG) has 15-20 members. It is usually formed by people belonging to one neighbourhood to fulfil their credit needs. They meet and save regularly. They are not registered groups like cooperative societies.
Line of difference:Cooperatives are the formal sector of credit as it needs to be registered under the Cooperative Societies Act, 1912; whereas, Self Help Groups are informal sector of credit.

Cheque and Demand Draft

Cheque: A cheque is issued by the customer of the bank. A cheque is an order of payment from an account holder to the bank. Cheque can be cancelled as well.
Demand draft: Demand draft is issued by the bank, to the applicant, in favour of another person or entity. Demand draft cannot be cancelled as it is pre-paid.
Line of difference: A cheque is issued by the customer of the bank, whereas a demand draft is issued by the bank.

Credit card and Debit card

Credit card: It is a facility provided by the bank that allows the account holder to spend money on the credit card but that money has to be paid back. The credit limit is fixed according to the credit facility of the bank for the individual.
Debit card: It is a facility provided by the bank that allows the account holder to make card payments or withdraw cash from an ATM.
Line of difference: Credit card allows the customer to spend money as per the credit limit set by the bank for the individual, but in debit card the limit depends upon the amount in the person's account.