What’s the Difference Between Credit and Debit Cards?


In this digital age, when the entire world is fast moving towards a cashless economy, with people paying for goods and services online and offline using their bank cards, some people still do not really understand how to differentiate between a credit card and a debit card.  

Indeed, both credit and debit cards share lots of similarities. They both have 16-digit card numbers, magnetic strips, EMV chips and expiration dates. You can use them both to make purchases at stores and eCommerce sites and other online mobile wallets. In all these, the main difference between credit cards and debit cards is that credit cards allow you to borrow a limited amount of money from the card issuer to make purchases. In contrast, debit cards only allow you to spend the money in your bank account. 

Of course, some might believe that the use of a physical card is “old hat” these days. After all, there are so many other ways to pay, ranging from eWallets to crypto to mobile payments. Casino sites often take the lead in this area, as there are many to pay and withdraw at a casino online, with some offering more than a dozen options. Debit cards are usually accepted at casinos, but many responsible outlets don’t allow credit cards for deposits. 

What you Need to Know About Credit Cards

Banks issue customers a credit card to allow them to borrow funds for their transactions and pay back the same with interest as stated in their banks’ terms of service. Depending on the customer’s needs, credit score and financial pedigree, they could be issued a Standard credit card, premium card, Reward card, Balance transfer card, Secured credit card or a charge card.

Why you should use a Credit Card

If you are financially prudent, using a credit card will help you build your credit score. Your credit report keeps track of your positive histories like on-time repayments and negative records like late payments and maxing out your credit. If you’re a responsible spender, using a credit card will help you build your credit score so effectively to reach greater heights. Credit cards also provide a more robust warranty, purchase and fraud protection, and you will also get some rewards if you keep to the terms.  

The downside of using a credit card

Apart from the interest rate and fees they’d charge you on your credit card spending, another downside of using a credit card is that it predisposes you to incur debts, and late payment negatively impacts your credit score. 

What you Need to Know About Credit Cards

Unlike credit cards, your debit card only allows you to make payments with the money in your bank account. This entails that your spending would be limited to your savings, and you don’t incur debt during your financial transactions. Financial institutions issue three types of debit cards. The standard debit cards withdraw from your account. States and financial institutions give the Electronic Benefits Transfer cards to qualified users to make purchases using their benefits. On the other hand, prepaid debit cards are preloaded with specific amounts for making purchases. 

Frugal customers prefer debit cards over credit cards because they won’t incur any debts, and it involves very nominal fees or charges. 

The downside of using Debit cards

Unlike credit cards, you can’t use your debit card to build your credit score. You also won’t get any rewards despite your level of financial discipline and frugality.

In conclusion, both debit and credit cards have their pros and cons. However, most people prefer to use credit cards due to their numerous benefits. In the end, it’s all up to you to choose the one that best suits your needs, but most financially prudent people prefer using a credit card, but they use it as if it’s a debit card.

Tech Junkie is a small word for Vikas Kaushik. Whether the latest game on the market or a new gadget launch he is the go-to person. He drives his motivation from the fast-paced technological advancements. He ensures that the right news reaches niche audiences. An avid biker and movie buff he has deep-rooted faith in upcoming technological inventions and is a torchbearer for the tech revolution.

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