What's the difference between credit cards and debit cards

Credit card vs Debit card

Many of you might be confused what’s the difference between credit card vs debit card. It’s easy to understand why. They both look almost the same, are accepted at most of the same places and eliminate the need to carry cash with you. 

There are actually many small differences, but the one, most important to mention, is where the card is pulling money from. When you pay with debit card, you can spend up to an amount, you have on the card. On the other hand, when you pay with credit card, the provider/lender of the credit card charges it from your credit line. If you don’t pay the amount back in 30 days, provider/lender is going to charge you an interest, which is mostly pretty high. Basically, it’s something like a small loan. 

Credit card is a card that allows you to borrow money for a purchase. Each credit card has different credit limit. Your credit card balance and payment history will affect your credit score. Credit cards usually have lots of benefits, which is one of the main reasons we prefer to get credit card instead of a debit card.

They offer a purchase protection, have zero liability if lost and have lots of rewards. We can now choose a card, depending on rewards it offers, such as cash back, discounts, travel points and many more. 

Debit card is basically same as a credit card, but not the same at all. It offers you the convenience of a credit card, but it works in a different way. It draws money straight from your account, which is like paying with cash. The limit is 0 so you basically cannot get in debt. 

You can easily keep track of you spendings when using a debit card, but you won’t have any benefits, Unfortunately, debit cards do not offer any rewards, which is one of the main reasons why we get a card at the first place. 

Credit card points

You usually get 1 point per $1 spent. So if you purchase a laptop for $1 000, you will get 1 000 points.

How much are they actually worth? Well, that depends on company, but they are typically worth about 1 cent per 1 point. So if the laptop cost you $1 000 – 1 000 points, then you get $10 cash back.

Most likely you are thinking, only one cent?!! Yes, only one cent, but you get nothing out of debit cards. 

Security features

When it comes to security, there is definitely credit card in a huge advantage. Imagine that your card get stolen and somebody makes a purchase from your credit card. You will be typically refunded for fraudulent activity.

Meanwhile, if the same scenario happens to your debit card, you will most likely not be refunded. 

Cards get hacked on a daily basis nowadays, and there is nothing we can do about it. Maybe you are thinking, why would they hack my account if I barely have some money on the card? It doesn’t matter. Your card can get hacked as well. 

So generally, if you want to stay safe, credit card is the safer option. Having a good credit score and finding a right card, you will be able to find a card that gives you an extreme amount of benefits and most importantly you will be safe. 

As you could noticed, the majority of credit cards around you are Mastercard or Visa, which means that the provider is the responsible for the potential theft. 

Security of the credit cards

Who can access my bank account information?

When it comes to bank accounts, you might be wondering, who can access my bank account information?

Banks typically hold information about your identity. Financial institutions are required by law to keep your bank account information private and not share it with other parties.

The information mentioned before is your social security number, driver’s license information, how much money you deposit, how much money you have within your account, and type and time of bills you are paying. 

Conclusion

What should I do if I cannot decide between credit card vs debit card? Well, pick the one that fulfils your criteria. I would personally say that debit cards are for a daily use, such as doing groceries, transportation etc. Credit cards are more suitable for extra value, such as rewards, points and benefits.

We cannot say which one is better. It varies from person to person. In a summary, credit cards offer more than debit cards. If you can manage your finances, then credit card full of rewards would be the optimal choice for you. You can even have more credit cards for specific rewards or purposes. 

Leave a Comment

Your email address will not be published. Required fields are marked *