The difference between a debit card and a credit card, and its general overview.


The difference between a debit card and a credit card, and its general overview.

A debit card and a credit card have so many similarities, they are identical and have share so many features and characteristics, for example, they both have a 16 digit card number, offers convenience and eliminates the needs to move around with cash, uses pin numbers and have an expiry date, they also look very similar physically and tend to carry the same logo, hence, to differentiate them may be difficult for some.

However, the major difference between a debit card and a credit card is the source where they pull their money from, a debit card is linked to your bank account and sources money directly from your bank account while a credit card sources money from your next line of credit by borrowing money from the card issuer.

Overview of a debit card

A debit card also performs the functions of a credit card i.e it eliminates the need to move around with cash, the only difference is in the way it works, as it draws money directly from the owner’s bank account whenever a purchase or financial transaction is made. Most banks and credit unions provides customers with one after opening a bank account with them.

The card allows customers to access cash even if they aren’t at the issuing bank, it uses a pin which is like an authorization code so that it can be used in ATM and stores, although you can still use it at many stores without a pin, all you have to do is to sign the receipt just as you would do with a credit card. Here are the brief summary of what a debit card is:

  1. It is linked directly to the checking account.
  2. It can also be used where a credit card would be used.
  3. The pin is usually used to complete most transactions.

When to use a debit card

It is best for a person that has spending issues and needs to control spendings, as it would normally prevent you some falling into the credit card debt trap. One of the major advantages of the debit card is that it gives access to cash in all the 470,135 ATMs in the country.

It is more cost effective to use a debit card in accessing cash, it charges no fee for cash withdrawal except for those who uses it more frequently, this is against the use of credit cards as a means of withdrawal which charges a cash advance fee of about $3 to $5.

Overview of a credit card

A credit card is different in it’s mode of operations from a debit card, it allowed users to borrow money against a line of credit, this is usually from from a credit facility or company, this card can be used to make limitless transactions. An interest is always charges on purchases if you can’t pay for your credit within the month i.e withing a period of 30 days. The interest charged is on an average of 18.86% but can go as high as 25%.

When you use a credit card, you don’t pay for your purchases immediately, the credit company is responsible for paying the merchant, and the amount is added to your credit balance, your ability to spend depends on your credit limit, a higher spending limit is dependent on better credit scores.

For those that are up to date in paying their credits, they receive bonuses and discounts on a number of services, they may also get cash back for a part of the money spent, and this allows for a higher spending limits.

When to use a credit card

Credit card is very useful for those who seeks to build credit scores, a good and solid credit scores have lots of advantages, it can qualify you lower rates when purchasing a home, buying a car, seeking car insurance, renting an apartment, or cell phone plan, these are the more reasons why people use credit cards, for without it, these things may be totally impossible.

Credit card companies gives rewards for each transaction, you earn points which can then be traded for travel discounts or other things, there is also a sign up bonus for new account holders, which can be in the form of free hotel bookings, free flight fare, or amounting to hundreds of dollars in cash, for almost every transaction made, there is always a reward.

Even though there isn’t much difference between credit card and debit card in terms of security, fraud or theft, credit card is more safer to use, as the federal law protects credit card users to an extent, in the case of theft, the loss is mostly on the credit card companies, below is the summary of what the law says:

  1. There is a $0 liability for costs if a user notifies the company before the card is used for transactions.
  2. There is also a $0 liability for unauthorized use if only the number on the credit card is stolen.


From the salient points made so far, each card has its own merits and demerits, and it all depends on the personality involved to choose what suits his use, but we can then conclude that credit cards are more preferable than debit cards, save for its interest rates


Amy Beardsley: Credit Card vs. Debit Card: The Difference and Why You Need to Know

https://www.dollarsprout. com/credit-card-vs-debit-card

Miriam Caldwell: What Is the Difference Between Credit Card and a Debit Card?

https://www.thebalance .com/difference-between-a-credit-card-and-a-debit-card-2385972