What is a credit card and what is a debit card?

Answer 1

Debit cards is a card that is directly linked to your bank account, so if you use your debit card on a $46 purchase, $46 will be taken out of your account.....A credit card is money that you don't have, think of borrowed money, it has a certain credit limit, it has a high interest rate, and you pay it monthly.

Answer 2

When you use a credit card you are borrowing money from the company that issued the card. You promise to repay the loan according to the terms of the credit card agreement. Usually you get a grace period of about a month to repay the loan before the credit card company starts charging you interest but if you don't pay the entire balance due on the card when you get a statement, you start paying interest on the balance.

A debit card is tied to an account of yours, usually a checking account. When you use the card the money comes out of your account (similar to when you pay by check). You are not borrowing money. You are using money you already have in your account.

As far as making purchases you use credit cards and debit cards in the same manner. If a store accepts Visa or MasterCard they must accept both credit and debit cards. Usually with a debit card you must provide a PIN number when you use it although my credit union has instructed us to tell the stores that the debit card is actually a credit card so we don't have to use a PIN.

The annual fees, transactions fees, interest rates, penalties, rebates or rewards, etc. that might be associated with debit and credit cards varies from one card to another so consider how you will be using your cards and choose one that's best for you.

Personally I use credit cards that offer rebates. The Citi Dividend Mastercard pays a 5% rebate on purchases at grocery stores, drug stores and gas stations up to $300 per year and the Chase Freedom Mastercard pays 1% rebate on all purchases. But I pay the entire balance off every month so I never pay any interest. Neither of those cards has an annual fee.

Answer 3

A credit card is a card where you have been GIVEN a certain amount of money, in an account, that you can use the card for to purchase things. Then you pay it back with monthly installments at an outrageous interest rate. A debit card is a card where YOU put in a certain amount of money into an account and you use the card to purchase things. There are no monthly payments or interest paid.

Answer 4

A debit card is an ISO 7810 card which physically resembles a credit card, and, like a credit card, is used as an alternative to cash when making purchases. However, when purchases are made with a debit card, the funds are withdrawn directly from the purchaser's current/checking or savings account at a bank or credit union.

Answer 5

Credit card - pay later. Debit card - pay now. Prepaid debit card - pay ahead.

With a credit card, you're allowed to spend upto a certain amount (limit) and you get a monthly statement and need to pay whatever you've spent.

With a debit card, as you make purchases, the money comes out of your account.

With a prepaid debit card, you put money onto the card first. You can then spend as much as you've put onto the card. As you spend, your balance comes down.

Answer 6

credit card allows you to spend a certain amount within a month depending on the amount allowed by the company. the standard limit usually is around 500. About a month after you start using your credit card, a statement is sent out and anything you spend from that point on will be on the next statement. However, if you don't pay off the last month's statement, your spending for the next month will be limited because the amount accumulates. if you are unable to pay off last month's bill before next one comes around then you are charged interest for having whatever is left over.

debit cards take money directly from a checking account, I believe and if you don't have money in the account you can't spend any money. Credit allows you to pay later in a sense and accumulating all your spendings in monthly increments.

Answer 7

A credit card is a revolving type of loan. You barrow money from a bank when you use a credit card.

A debit card is used to draft money from your bank account. Its like writing a check but clears a whole lot faster than a check.

Answer 8

Credit cards are extending you a line of credit... you are spending money you don't have in any account they charge ionterest rates,and require you to pay them back. Debit cards are usually connected to either a checking accoutn or a savings account. When you use a debit card you are using money that you actually have, and won't have to pay back.

Answer 9

For having a debit card you need to have the amount you spend in your bank account.

Answer 10

A credit card takes money out of a set limit that you've borrowed. You pay interest on it and have to pay it back.
A Debit card takes money out of your account (money you already have) and there is no interest.