A Debit card and a Credit card are both types of payment cards, but they work differently.
A Debit card is linked to your Checking Account and allows you to make purchases by withdrawing Money directly from your Account.
A Credit card , on the other hand, allows you to borrow Money up to a certain limit and pay it back later with Interest
Here’s a summary of the key differences between a Debit card and a Credit card:-
1] Funds:- With a Debit card, you can only spend the Money you have in your checking account. With a Credit card , you can spend up to your Credit limit, which may be more than the Money you have in your Bank Account.
2] Interest and Fees:- Debit cards generally do not have interest or fees associated with them, while credit cards often have high interest rates and fees such as late payment fees and over-limit fees.
3] Rewards and Benefits:- Some credit cards offer rewards and benefits, such as cash back, points, miles, and discounts. Debit cards do not typically offer these types of incentives.
4] Credit Score:- Using a credit card responsibly and paying your bills on time can help improve your credit score, while using a debit card does not have the same impact.
5] Fraud Protection:- Debit cards and credit cards both offer fraud protection, but the process for resolving fraudulent transactions is different. If fraud occurs on a Debit Card , the funds may be immediately taken out of your account and may be difficult to recover. With a Credit Card , you may be able to dispute fraudulent charges and have them removed from your account.
When it comes to Personal finance, It is Important to choose the type of payment card that best suits your needs and spending habits.
Debit Cards are a good option for those who prefer to stick to a budget and avoid debt , while Credit Cards can be useful for earning rewards and building credit.