What Is Different Between A Debit Card And A Credit Card?

Answer 1

A debit card, aka checking card, is a card that charges directly from your checking account. Anything you buy with it will be taken out of your account. There is no interest charge involved. Your spending limit is obviously based on how much money you have in the bank. If you charge more than you have in your checking account, your bank will charge you an overdraw fee.

A credit card does not come out of your account, but it DOES charge interest. How much interest is based on your credit rating. The lower your rating, the higher the interest. Interest is added every month until the total balance is paid. So, if you buy something for $100, and your interest is 15%, then you'll owe $115 on your bill. Let's say you pay $15 for that bill. Your remaining balance is $100, but you'll be charged 15% interest again, so your next bill will again be $115. Credit card companies have different limit amounts, but most people start off with $500-$1000 max limit. Your limit will gradually increase the longer you have the card and keep in good standing.

Answer 2

A debit card is a card that is issued to you ..where when you use it... the dollar amount DEBITS from your checking account. There will be nothing owed at the end of the month because the purchase amount has already been paid.

A credit card is a card where a line of CREDIT is extended to you...and you are borrowing against that line for purchases....at the end of every month you are responsible for paying a minimum payment of the credit your have borrowed against.

Laissez F Guy is incorrect... if any purchases that are made to your checking account are unauthorized... you are NOT responsible for any fees or penalties. While an investigation is being done.. you will be issued what is called provisional credit.. which is a credit that we give you to cover you while the investigation is being completed... if investigation proves that your accusation was false we take it back.. if it's true then the credit is what is owed and you keep it.

Laissez F Guy: The bank at that point can issue apology letters to the companies/people who's check where returned because of this error. The bank should at that point reimburse the fees assessed by those companies as well.

Answer 3

A Credit Card is a personal line of credit estabalished by the bank for you. When you charge something, they pay it and it just goes on your monthly bill for you to pay later.

A Debit Card links directly to your checking account. When you use it, the payment is made directly from your bank account to the vendor.

If you have a choice, I strongly advise against using the Debit card. When mistakes are made or fraud committed, your bank account will be drained, and you'll start bouncing checks all over the place. Yes, you do have protections and you will "eventually" get your money back, but you are on the hook for overdrafts and penalties. Credit cards do not have this problem. Any problems are disputed with them, and you do not have to pay any money out of pocket while it's being corrected.

To Vanessa: The point is, until you catch the error or fraud, your money is gone, and you will be bouncing checks or find the money not there, until that provisional credit is issued. Will the bank go back and pay all your penalties from the various companies from when the checks bounced?

Answer 4

A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer. It is also different from a charge card, which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged.
A user is issued a credit card after an account has been approved by the credit company.