Credit vs. Debit Cards: Empowered Shoppers Know The Difference — And When To Use Each

By Anna Bahney

It is the annoying lag in any otherwise seamless cash-free purchase: You swipe your card, you OK the amount — and then the card reader wants to know if you’re paying with a debit card or a credit card.

Who cares? I’m paying, right? What does it matter if it is a credit or a debit card?

It actually matters a lot — not just for the retailer, but also for you.

If you carry a debit card and a couple credit cards and perhaps use them interchangeably, it is important to know the difference. There are times to use credit and time to use debit.

One major difference, besides how your money gets delivered to the retailer, is that using a credit card helps you build a credit history and — depending on the type of card — may net you some reward points. That’s helpful for people who manage their credit and qualify for rewards cards.

But for those looking to control their spending and avoid black marks on their credit report, debit cards can be a safer choice.

And that’s not where the differences end.

Here’s our breakdown on how to savvily and safely get the most out of your debit and credit cards.

Debit card vs. credit card: What is the main difference?
Here’s the main difference between a debit card and a credit card.

A debit card pulls your money directly out of your bank account to pay a retailer. It’s like writing a check, but faster — the money for the purchase comes out of the account almost immediately.

A credit card allows you to borrow the money from a bank to make a purchase. The money isn’t coming from your bank account to pay for the purchase; you’re borrowing it to purchase the item, and receiving a monthly bill for use of the bank’s credit.

When should you use a debit card instead of a credit card?
With a debit card, you have access only to the money that’s in your bank account. For this reason, many people prefer using debit cards as a simple way to keep track of and manage their spending.

You are not borrowing anything, you are not overextending yourself and once the purchase is made, it is simply bought and paid for — there’s no bill to settle.

When you make purchases this way, you’re not paying anyone to use the money or to extend you credit. In this way, a debit card offers the “free use of money.”

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