what is the difference between a credit card and a debit card?

Answer 1

What's the Difference?

Credit. Every time you use a credit card, you are actually borrowing money that is made available to you by a bank or other financial institution. The institution pays the debt to the vendor, and in turn, you pay the money back to the institution. By signing up for a credit card, you agree to pay back the money that you borrowed, in addition to any interest drawn on the amount you borrowed.

Debit. Odds are, you have a debit card in your wallet or purse right now, since many ATM cards are programmed to have debit options. Issued by your bank, debit cards take funds directly from the money that you have in your bank account--in a sense acting like a check, just faster. With a debit card, you don't have to carry cash or checks, and it is very convenient to shop at a variety of places including gas stations, grocery stores, restaurants, and retail stores. They provide instant access to your money and are accepted worldwide.

Debit cards are used like credit cards, meaning that the store you are shopping at 'swipes' them, and then you sign off on the receipt. You don't have to show a picture ID, and there is usually no PIN number for you to punch in.

Answer 2

A credit card is a system of payment named after the small plastic card issued to users of the system. 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 (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), 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. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.

A debit card is a plastic card which provides an alternative payment method to cash when making purchases. Physically the card is an ISO 7810 card like a credit card; however, its functionality is more similar to writing a check as the funds are withdrawn directly from either the cardholder's bank account (often referred to as a check card), or from the remaining balance on a gift card.

Depending on the store or merchant, the customer may swipe or insert their card into the terminal, or they may hand it to the merchant who will do so. The transaction is authorized and processed and the customer verifies the transaction either by entering a PIN or, occasionally, by signing a sales receipt.

In some countries the debit card is multipurpose, acting as the ATM card for withdrawing cash and as a check guarantee card. Merchants can also offer "cashback"/"cashout" facilities to customers, where a customer can withdraw cash along with their purchase.

The use of debit cards has become wide-spread in many countries and has overtaken the check, and in some instances cash transactions by volume. Like credit cards, debit cards are used widely for telephone and Internet purchases. This may cause inconvenient delays at peak shopping times (e.g. the last shopping day before Christmas), caused when the volume of transactions overloads the bank networks.

Answer 3

A debit card withdraws money from your checking account. A credit card is charging it, and agreeing to pay your credit card bill. With the credit card, you are trusted to pay back the money versus already having the money in an account with a debit card.

Answer 4

Debit card debits cash from your checking account balance .
A credit card is a loan that accumulates until the end of the billing cycle .
If you do not pay off the entire amount , they will start adding interest charges .
Many people carry balances , which is how the credit card companies get rich , from those % payments .

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Answer 5

A monetary enterprise card is linked on on your checking account. it is not relevant which one you %. once you're making a purchase order, because of the fact the two way it comes straight away out of your account. If it turn into an particularly mastercard it does now not be linked on your checking account and you're able to get a month-to-month bill for it. there isn't any extra desirable can charge to %. Debit, the only expenses that are linked on your card could be in case you took money out of an ATM. while i flow to the save I %. credit, because of the fact I continuously forget approximately my pin #. They extra the credit option so human beings could make different purchases which includes on line, plane tickets, and at small shops that don't have the debit option. you do not have an particularly mastercard, you have a monetary enterprise card with a grasp card or visa emblem on it

Answer 6

You can charge expenditures to your credit card (up to an agreed limit) at retailers etc who accept that card, and pay the account from your card operator (usually a bank, but can be American Express, etc) when it comes in - usually avoiding interest if you pay immediately, but accumulating expensive interest if you don't. With a debit card there can be various arrangements but I understand you deposit funds to the card operator in advance (again usually a bank) into that card account, and then you can purchase goods against that deposit. Or under some systems you can spend from your bank account through the debit card, without using a cheque. I find credit cards gives greatest flexibility, but require some management - debit cards can control your extravagance!

Answer 7

Debit card gets taken out of a checking account. You have to have the money in there, and there's no bill to pay. Credit cards charge interest, and you pay over time.

Answer 8

Phoenix is RIGHT, but technically only answered half the question. When you put X amount of dollars in a checking account, a debit card saves you ink writing a check. You only work with, what's in the checking account. A credit card gives you plenty to get in trouble with, if you abuse it. Interest is higher than a Giraffe's A$s. Rims aren't cheap. That new home stereo sounds good. Whoa, I owe how much?? That the difference.

Answer 9

A credit card borrows against an account in which you don't have any money. You pay back your balance plus a daily interest rate. (Usually, with non-secured credit cards...this is most often what people are working with anyway).
A debit card removes money for your purchase electronically, from an account in which you already have money. There is no interest charged.

Answer 10

Credit card means you're using the card companies money.
Debit card, you're using your own money - you already have in the bank.
A debit card is like having a *plastic check* - Seeings as most places wont even take a check - cause it might come up as *rubber* (bouncing for insufficient funds) - a debit card, well, you're using money you've got, not what you don’t have, so it's all good.
:)