Credit vs. debit cards: February 14, 2019
Have you ever wondered what the basic difference is between a credit card and a debit card?
When a debit card is used – regardless of whether it’s run as “credit” or “debit” at a point-of-sale terminal – the funds are withdrawn from your checking account that is linked to your card.
When a credit card is used, you receive a bill for those transactions and must make at least a minimum payment toward paying down the total balance on the card, typically once per month. If you pay an amount that is less than the total balance, you will be charged interest on the remainder of the balance.
Deciding which type of card to use for a transaction really depends on your financial situation and what kind of purchase it is.
Using a debit card may be advantageous if you’re trying to stick to a budget and/or live within your means by only spending money that you actually have.
A credit card might be your preferred payment option if you’re traveling (some travel expenses can only be paid by credit card), you’re trying to build your credit history, you want to earn rewards on your purchases (if your card offers a rewards program), or you want extra protection on what you’re buying (if your card offers such protection).