Debit Card vs Credit Card 

Debit Card vs Credit Card

Credit cards and debit cards have 16-digit card numbers, expiration dates, magnetic strips, and EMV chips in common. Both can make shopping in stores or online simple and convenient. Debit cards allow you to spend money from your bank account. Credit cards allow you to borrow money from the card issuer to buy goods or cash out. Know the differences between Debit Card vs Credit Card.

Watch the below video on Debit Card vs Credit Card:

A Credit Card 

A credit card is a document provided by a financial organization, usually a bank, allowing the cardholder to borrow monies. Cardholders agree to pay the money back with interest. 

Here are the benefits and drawbacks of using credit cards. 

Boost Credit Scores 

Credit card use affects credit score. This contains both good and negative factors such as on-time payments and low credit utilization levels. To construct credit scores, credit report data is used. Responsible spenders can improve their ratings by keeping their card balances low compared to their card limits. 

Buyer’s Warranties 

Some credit cards also offer extended warranties or protection on purchases beyond those offered by the shop or brand. For example, if a credit card item breaks after the manufacturer’s warranty has expired, check with the credit card company to see whether they would cover it. The purchase and price protection may help you replace stolen or lost items or refund price discrepancies when the item you purchased is sold for less elsewhere. 

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 So long as the consumer notifies the loss or theft promptly, their maximum culpability is $50. The Electronic Fund Transfer Act protects debit card holders from loss or theft, but only if they report it within 48 hours. There is no limit after 48 hours and no limit after 60 days. 

Credit Card Drawbacks 

The biggest disadvantages of credit cards are debt, credit score, and expense. 

Saving Can Cause Debt 

Using a credit card means spending the bank’s money, not yours. Repayment is due with interest. You must at least make the monthly minimum payment. Having huge balances on many cards might make monthly payments difficult and strain your finances. 

What Affects Credit 

Paying bills on time and keeping credit card balances low will enhance FICO scores. The habit of paying late, maxing out cards, closing accounts, or applying for new credit too frequently might damage your credit history. 

A Debit Card 

Instead of borrowing money from a bank, a debit card debits money straight from a consumer’s checking account. When issued by major payment processors like Visa or Mastercard, debit cards have many of the same consumer safeguards as credit cards. 

Why use debit cards? 

Like credit cards, debit cards have pros and cons. 


A debit card uses funds already in the user’s account, eliminating the risk of debt. 

Retailers know that customers who use plastic spend more than those who pay cash. 

Using debit cards helps impulsive spenders avoid credit temptation and stay on budget. 

Fraud Defenses 

Also, certain debit cards, especially those supplied by payment processors like Visa or Mastercard, are starting to offer more credit card safeguards. 

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Cons of Debit Cards 

Like credit cards, debit cards have negative effects on credit scores and are expensive. 

No Bonus 

With a debit card, you won’t earn points, miles, or cash back unless you have a rewards checking account. Because rewards can save you money depending on how you use them, merely using a debit card may be a waste. 

Building credit shows lenders that you can responsibly return money borrowed. You can’t do that when using a debit card linked to your bank account, therefore using a debit card alone won’t help you develop credit. 

Debit Card vs Credit Card: Conclusion 

While credit and debit cards seem similar, their perks and drawbacks differ. If you value developing credit and earning rewards, credit cards are critical financial tools. A debit card is ideal if you want to keep a closer handle on your finances. Whichever you choose, be sure to understand the accompanying fees.

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