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Difference Between Credit Card and Debit Card

Credit card and Debit card are part of a payment system issued by financial institutions, such as a bank, to a customer that enables its owner to access the funds in the customer’s designated bank accounts.  Through this article, let’s discuss something important which is The Difference Between Credit Card and Debit Card.

Credit Card

A credit card allows you to make purchases with borrowed money, known as credit. As you spend and make purchases with your credit card, you will begin to accumulate a balance that must be refunded at the end of each month. 

The credit card is a credit facility that enables you to buy things immediately, up to a pre-arranged limit, and pay for them at a later date. The cost of the purchase is added to your credit card account and you get a statement every month.

Credit Card Importance

Using your card and paying your bill on time will help build a positive credit history. Having a positive credit history will save you money for future loans and purchases. The most immediate benefits of having a credit card are the additional purchasing power and flexibility. Most companies accept credit cards and some services, such as Uber and car rental agencies, only accept credit card payments.

For individuals, credit cards are an important part of everyday life. Whether purchasing gas and groceries or reserving a hotel and rental car for an upcoming vacation, credit cards represent a convenient and secure form of payment for consumers. 

Credit Card Types

  • Discover it® Cash Back.
  • Chase Sapphire Preferred® Card.
  • Capital One® Quicksilver® Cash Rewards Credit Card.
  • Discover it® Balance Transfer.
  • BankAmericard® credit card.
  • Wells Fargo Platinum Visa card.  

Debit Card

A debit card is a plastic payment card that can be used instead of cash when making purchases. It is similar to a credit card, but unlike a credit card, the money comes directly from the user’s bank account when performing a transaction.

When you open a checking account for the first time with a bank, you will most probably be asked to deposit money in this account. A debit card and your bank account are directly connected. The use of a debit card will automatically deplete the funds in your bank account.

Most debit cards will have a credit network such as VISA or the MasterCard logo. Having these credit networks printed on them means that the debit card is accepted as a form of payment in many places. Despite this, the use of a debit card will not generate your credit history.

In a side note, a debit card can also be used to withdraw or deposit cash from an ATM. There are also cards designed specifically for this purpose, called ATM card.

Debit Card Importance

1- Debit cards facilitate everything. They are becoming an increasingly important component of the average consumer’s spending pattern. According to the most recent data from the Federal Reserve, more consumers are continuing to shift away from writing checks.

2-Debit card purchases can usually be made with or without a personal identification number (PIN).

3-Debit cards serve a dual purpose: They allow the user to withdraw money from his or her checking account through an ATM or through the cash-back function many merchants offer at the point of sale.