Debit và credit cards offer more than a way lớn access money without having lớn carry around cash or a bulky checkbook. Debit cards are lượt thích digitized versions of checkbooks; they are linked to lớn your bank account (usually a checking account), and money is debited (withdrawn) from the trương mục as soon as the transaction occurs. Credit cards are different; they offer a line of credit (i.e., a loan) that is interest-free if the monthly credit card bill is paid on time. Instead of being connected to a personal ngân hàng account, a credit thẻ is connected lớn the bank or financial institution that issued the card. So when you use a credit card, the issuer pays the merchant and you go into debt khổng lồ the card issuer.

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Most debit cards are miễn phí with a checking trương mục at a bank or credit union. They can also be used lớn conveniently withdraw cash from ATMs. Credit cards have the advantage of rewards programs but such cards often require an annual fee to lớn use. Financial responsibility is a big factor in credit card use; it is easy lớn overspend và then get buried in overwhelming credit thẻ debt at a very high interest rates.

This comparison provides a detailed overview of what debit & credit cards are, their types, associated fees, & pros and cons.

Comparison chart

Credit thẻ versus Debit thẻ comparison chart Credit CardDebit CardAbout Connected to lớn Monthly Bills Application Process Spending Limit Interest Charged Security Fraud Liability Credit History Overdraw Fees PIN
Credit cards are lines of credit. When you use a credit card, the issuer puts money toward the transaction. This is a loan you are expected to lớn pay back in full (usually within 30 days), unless you want to lớn be charged interest. Any time you use a debit thẻ to buy something, money is deducted from your account. With a debit card, you can really only spend the money you have available khổng lồ you.
Not required khổng lồ be connected khổng lồ a checking account. Checking or Savings Account
Yes No
Somewhat difficult, depending on one"s credit score & other details. Easy, with basically no barrier khổng lồ receiving a debit card.
The credit limit set by the credit issuer. Limits increase or stay the same over time as a borrower"s creditworthiness changes. However much is in the bank account connected lớn the card.
If a credit card bill is not paid in full, interest is charged on outstanding balance. The interest rate is usually very high. No interest is charged because no money is borrowed.
Credit cards in the U.S. Are not very secure in và of themselves because many still use dated card security technology. However, consumers are not held liable for this poor security. A sạc pin makes them secure so long as no one steals the card number and PIN, & as long as you don"t lose the card itself. If the card/info is stolen, debit cards are very insecure.
Low. Rarely held liable for fraudulent activity. If you are, you are only held liable for a maximum of $50. High. If someone steals your card & makes purchases, that money is removed from your ngân hàng account. Investigating this damage takes time. The longer you wait khổng lồ report the fraud, the more likely you will be held liable for your own losses.
Responsible credit thẻ usage và payment can improve one"s credit rating. Credit cards typically report trương mục activity khổng lồ at least one of the three major credit bureaus on a monthly basis. Does not affect credit history.
Low. Some credit thẻ companies allow to overdraw amount over the maximum credit line with a fee. High "overdraft" fees. Possible to overdraw amount over the tài khoản limit.
In the U.S., this is uncommon, but PINs are being phased in. Usually

What Are Debit Cards?

A debit card is always tied to a checking account, so they are also sometimes known as "checking cards." Any time you use a debit card to buy something, money is deducted from your trương mục — usually on the same day, if not immediately. For example, if you have $1,000 in an account and spend $30 using a debit card, $30 is removed from the checking account, leaving behind $970. With a debit card, you can really only spend the money you have available to lớn you. If you only have $970 left, spending any more than that may result in an overdraft charge.

When you use a debit thẻ for an in-person (not online) transaction, you must use your personal identification number, or PIN, to lớn approve the transaction. When you use a debit card for a credit card-like transaction, you will normally have to sign a receipt (in the U.S.). However, signature requirements are being phased out in favor of PINs, so soon there will be no difference between the experience of using a debit thẻ for a debit or credit transaction.

It is easy lớn apply for a debit card. Any bank or credit union that you have a checking tài khoản with will issue you a debit thẻ upon request.

What Are Credit Cards?

Unlike debit cards, credit cards are not connected to lớn a checking account. Instead, they are tied lớn a financial institution, such as a bank or credit company, that is in the business of issuing revolving lines of credit to lớn consumers. Whereas a debit thẻ transaction is mainly between the buyer và seller, a credit card transaction specifically involves a third party: the institution who has loaned money lớn the buyer.

For example, if you use your credit thẻ to buy $30 of groceries, you are not directly paying the grocery store. Instead, the grocery store is paid $30 by the credit issuer. This is $30 that you now owe the credit card issuer.

With a credit card, you are never limited by the amount of money you have in your checking account, which can be one of the major cons to lớn debit cards for many consumers. Instead, you are limited by whatever the credit limit on the card is. If you are new to the world of credit, a credit card company may only issue you a thẻ with a $1,000 credit limit. This means you only have $1,000 of revolving credit khổng lồ use. Some card issuers increase credit limits over time for those who build up a good credit history by paying off their credit card each month (i.e., paying back their loan).

It is relatively harder khổng lồ get a credit card than it is lớn get a debit card, especially for those with no credit history or a poor credit history. When you apply for a credit card, the issuer evaluates your creditworthiness khổng lồ determine how risky it is khổng lồ loan you money. If the issuing company believes you are a poor credit risk, your application for a credit thẻ will be rejected.

Pros & Cons of Using Debit vs. Credit Cards

Most people carry and use both credit and debit cards because both types of cards have their quality advantages.

Acceptance by Merchants

The vast majority of retailers in the U.S. Accept both credit & debit cards, & customers pay the same price irrespective of the payment method they choose. But merchants pay a fee — called interchange fees — to payment processors like Visa & MasterCard for every credit or debit card transaction. This is usually flat fee, plus a percentage of the total transaction. The fees charged for a debit thẻ are much lower than those charged for a credit card. In the U.S., merchant credit card processing fees usually total lớn about a 2% cut.<1><2>

So merchants prefer it when customers use debit cards. Some merchants, lượt thích Costco, only accept debit cards (with the exception of Costco-issued Amex credit cards). Other merchants, lượt thích Arco gas stations, offer small discounts to lớn customers who pay via cash or debit cards.

Security và Card Theft



The U.S. Lags behind other nations when it comes khổng lồ credit card security.<3> Debit cards, which make use of a PIN, are more secure cards in & of themselves. However, credit cards are much more secure for consumers in a practical sense when fraud occurs.

If someone steals your debit thẻ information, the thief has direct and immediate access lớn the funds available in the ngân hàng account connected to your card. As it takes banks time to investigate fraud, you will have little immediate recourse. Worse, if you vì chưng not notice and report the fraud soon enough (within two days), you may be on the hook for $500 or more of your own loss. This can make paying bills that you would have otherwise had the money for difficult, if not impossible.

In contrast, if your credit card information is stolen, the thief takes out money from your credit issuer. This is money that you will very rarely be held responsible for if you make a concerted effort to report suspicious account activity as soon as you are aware of it. Under federal consumer protection law, you can never be held liable for more than $50 of fraudulent activity on a credit card.<4>

Risk of Overspending

With debit cards, you can usually ask your ngân hàng to offer overdraft protection or reject transactions when there are insufficient funds in the account. There is some risk of overdraft fees but you generally cannot spend a lot more money than you have if you use a debit card.

On the other hand, credit thẻ debt can become a nightmare very quickly if you fail to pay your bills on time. Most monthly credit card bills list two amounts — minimum payment due & monthly balance. If you only make the minimum payments that are due, interest starts to accrue on the remaining balance at staggeringly high rates of 12 lớn 24%. & since this interest is compounded, it is very easy to lớn get mired in a lot of debt. Financial advisors are unanimous in recommending that consumers repay their credit card debt first, before other loans like student loans or trang chủ equity loans.

Credit History

It is important lớn build a good credit history for yourself over time. A good credit score ensures you pay lower interest on mortgages and car loans, và lower insurance premiums. Landlords and potential employers also run credit checks.

Debit cards vì chưng not affect credit history at all. But credit cards can play an important role in building credit history. Owning a credit card and paying off credit thẻ bills in full every month makes a positive impact on your credit history. Conversely, owning a credit thẻ but falling behind on payments negatively impacts your credit score.

Getting a credit thẻ requires a lender to lớn pull your credit. So if you have a security freeze on your credit, you will have khổng lồ temporarily lift it to lớn apply. Most banks also pull credit when you mở cửa a new checking or savings tài khoản but some vày not so you may be able to lớn get a debit card without lifting the security freeze.

Rewards và Cashback

For years credit thẻ issuers have been enticing customers to sign up by offering rewards programs for using the card. The more you spend, the more money thẻ issuers make in transaction fees and, possibly, in late payments & interest if you fall behind in repayment. The most common credit card rewards are airline miles, "points" that can be redeemed for cash or discounts at certain retailers, and cash back. A majority of the credit cards that offer rewards also require an annual fee for the use of the card. One exception is the Capital One Quicksilver card, which offers 1.5% cash back on all purchases & has no annual fee.

Banks have also started offering some rewards for the use of debit cards but these are not as strong as credit card reward programs because banks get lower fees per transaction on debit thẻ use. Examples of debit card rewards include fee waiver on checking accounts if the debit thẻ is used three times in a month, and revolving discounts at certain merchant locations.

Interest and Fees

Few debit cards charge monthly or annual fees, nor vày they charge interest. Some credit cards charge an annual fee (which may or may not be worth it, depending on the card"s rewards), & all credit cards charge late fees & interest on debts that are not repaid on time. See also Annual Percentage Rate vs Interest Rate.

The main fee consumers have lớn be aware of when it comes khổng lồ debit cards is the overdraft fee or charge, which may be as steep as $30 or more per overdrawn transaction.<5> An trương mục becomes overdrawn when you make a charge that exceeds your available balance. For example, if you have $100 in your account, but spend $120, you have exceeded your tài khoản balance by $20 và may be charged an overdraft fee by the bank. If you have not opted in to an overdraft coverage program, your card will simply be declined.

Most banks offer overdraft protection & coverage services for a price. A few banks, such as Ally, support free overdraft protection by linking up multiple accounts so an overdrawn tài khoản will have access khổng lồ "backup" funds.

Not all fees are bad, perhaps. For example, debit và credit cards often charge small fees for transactions carried out overseas, but these fees or rates are often much lower than currency conversion rates you can get at a traveler"s exchange using physical money. (And some credit cards, in particular, have no foreign transaction fees at all.) Of the two types of cards, debit cards are more likely not khổng lồ work overseas, so confirming their functionality before traveling with them is a must.


In recent years, a personal finance subculture has risen out of credit thẻ rewards — specifically out of how to lớn take the most extreme advantage of thẻ signup bonuses & card rewards programs. This process, which usually involves signing up for lots of different credit cards (and sometimes later closing them), is usually known as "churning." While not exactly widely known, churning has become popular enough over time to lớn have an active subreddit community and garner the attention of financial advice sites & the credit thẻ companies themselves.

Some who are especially careful may benefit from their efforts, but long-term returns may not go as planned, and churning — particularly any và all opening & closing of accounts — can negatively affect your credit score. Churning can be an especially bad idea if you are looking khổng lồ take out a mortgage any time soon.<6>


Because a debit card is connected to a ngân hàng account that it withdraws funds from, as needed, there are no further payment processes to lớn consider. Credit cards, however, are loans that must either be repaid in full by a certain date or have a minimum amount, as phối by the thẻ company, paid onto them at the kết thúc of each billing cycle (with the knowledge that interest will be charged on any balance carried over into the next month — the loan left unpaid).

Most credit cards operate on a 30-day billing cycle. In the past, some credit cards operated on different billing cycles that made due dates fall on different days of the month. Following the passage of the Credit thẻ Act of 2009, credit card bill due dates must fall on the same day each month, & no late fees can be charged for payments that are "missed" due lớn the effects of holidays or weekends on the banking system.

Types of Debit Cards

1. PIN-only cards: PIN-only debit cards are linked khổng lồ your ngân hàng account và can be used for cash transactions & fund transfer, buy from retailers & pay bills online or by phone. The thẻ holder is required lớn enter a secure pin for every transaction to lớn establish identity và maintain security.

2. Dual-use cards: Dual-use debit cards are both signature- và PIN-enabled, and tied directly khổng lồ your ngân hàng account. You can verify your identity either by signing or entering your PIN.

3. EBT cards: Electronic Benefits Transfer (EBT) cards debit cards provided by a state or federal government agency to users who qualify for food stamps, cash payments, or other benefits. EBT cards can be used khổng lồ make purchases at participating retailers or to withdraw cash from an ATM, depending on the type of program.

4. Prepaid cards: Prepaid cards are not linked to a specific account, but provide access to lớn funds deposited directly on the thẻ by you or a third party. In effect, they work as a store-credit or gift card.

Except prepaid cards, all other types of debit cards are linked to a bank account, typically a checking trương mục but some savings accounts also offer linked "convenience" cards.

Types of Credit Cards

1. The Standard Credit Card: These are general purpose credit cards with revolving balance (i.e. Credit is used up when purchases are made, and is mở cửa again once the bill is paid). Standards cards are usually starter credit cards, usually for applicants with little or no credit history who meet the minimum required criteria.

2. Reward Credit Cards: These cards offer several rewards programs in the form of cash, points or discounts, & are intended to lớn influence your spending. Reward cards usually come with an associated annual fee và a lot of fine print; the key is khổng lồ make sure the rewards earned exceed the annual fee.

3. Secured Credit Cards: Also known as pay-as-you-go cards, their primary purpose is to lớn give people with bad credit history a chance lớn reestablish credit. The user first deposits a "secure" amount (say $300-$3000) —typically into a savings account — that makes for the credit line. The credit limit is usually a percentage (50%-100%) of this amount. These cards come with an annual fee and a high APR.

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4. Charge Cards: Charge cards vì not have a preset spending limit and balances must be paid in full at the kết thúc of each month.