Ever wondered the difference between a credit and a debit card? It’s easy to see why; debit cards and credit cards are widely accepted at many places. Cashless economy has been increasingly been adopted and even more when Covid-19 pandemic hit. Debit and credit cards both offer convenience and eliminate the need to carry cash. They even look similar. The main difference between a debit card and a credit card account is where the cards draws the money. A debit card takes it from your banking account, and a credit card takes it from your credit line. Starting with a credit card, it is a card that allows you to borrow money against a line of credit, also known as the card’s credit limit. You use the card to make basic transactions, which are reflected on your bill; the bank pays the merchant, and later, when you receive your bill, you pay the bank. If you use a credit card, you will be charged interest on your purchases. To avoid paying interest, ensure you don’t carry a balance over from month to month. Credit cards have high-interest rates, and your credit card balance and payment history can affect your credit score. For a debit card, it is not possible to overspend since you’re limited to only the amount available in your checking account. Plus, debit cards offer the same convenience as credit without requiring you to borrow money or pay interest or fees on your purchases. On the other hand, some credit cards offer additional insurance on purchases and can make it easier to request a refund or a return. When choosing between a credit or debit card, you should be honest with yourself and your ability to handle credit. If you have spending issues, it is better to use your debit card whenever possible, to prevent yourself from falling into credit card debt. Choosing debit is great for managing your money and helping you live within your means. Fraud protection Identity theft and fraud are risks to guard against whether you choose debit or credit. That’s why it is important to know what protections are included with your card. Fraud occurs when a criminal gains access to your debit card number—and in some cases, personal identification number (PIN)—to make unauthorized purchases or withdraw cash from your account. If your credit or debit card information has been compromised, contact your bank immediately. Most banks have a 24-hour hotline you can call. The sooner you call, the better.
