Debit Card vs. Credit Card

The use of debit card or a credit card has become a common practice among many Americans. Since the introduction of credit cards in the 1950s and the debit cards in the mid-70s, millions of Americans are now using these cards as part of their lifestyle. However, even though many individuals have been using credit and debit cards for their purchases for a long time already, most of them still do not know the difference between these two cards.

Difference Between Debit and Credit Cards

The main difference between a debit card and a credit card is that with a debit card, you are actually using your own funds and not borrowing from the bank. With a credit card, you are using the money of the bank and then paying it off with your own money at a later date. Debit cards are linked to a bank account. They have debit features that allow merchants to debit the amount of purchases directly from that account. This way, you will be using your own money without having to bring along hard cash.

With a credit card, you pay your purchases with the funds provided by the bank. These funds will have to be paid off within a particular period and may incur interests and other charges if not paid on time. It is like borrowing money from the bank.

Advantages of Credit Cards

Debit cards have several benefits but there are three main reasons why people pick credit cards over debit cards. First, they are allowed to spend more than the amount of funds they may have. With a debit card, their purchase power is limited to the amount that they have in their bank account. Second, credit cards offer better rewards to card holders in exchange of purchases. This feature is mostly not offered by debit cards. Third, credit card owners are better protected against fraud than those who use debit cards.

Which is Better?

The answer to this is dependent on how you use the card and where you are planning to use it. For instance, if you are looking for a card with better protection against theft and fraud, a credit card will work better for you. Credit cards also offer you a convenient method to resolve disputes with purchases while providing a better way to float or delay your acquisitions.

Credit cards are also more ideal for those that want to rent cars. Most credit card companies provide car rental and damage insurance on major vehicles and auto rental companies.

Debit cards, on the other hand, are useful for those that do not wish to go into credit card debt. Since you are using your own money to pay for your purchases, you definitely do not have to pay bank interest fees. Debit cards also help you control your spending habits.

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