By Tanya
Many years ago, there were checks to pay for purchases from your bank account and credit cards to make purchases on time. Even though we still have the option of using checks, we also have debit cards for our banking and purchase needs. Just like credit cards, they are plastic and can be used to make almost all types of purchases. Because they have become such a staple in our lives, many people confuse them with actual credit cards; the two terms are often used interchangeably. But, is a bank card a credit card? In short, the answer is no. There are several differences between the two.
Click here to compare credit card offers, including 0% APR, 5% Cashback offers
Difference #1
Debit cards are issued to customers by their banking institution. In order to use them to make purchases you must have money in your checking account. Credit cards on the other hand, offer you a line of credit. This is a type of loan that allows you to make purchases without paying for them outright.
For instance, if you have a $1,000 limit on your credit card, you can spend up to $1,000. When you reach your limit you can no longer make purchases with it. With your debit card, you deposit your own funds into your checking account and you can only spend what you have. Debit cards are basically checks made of plastic; you can’t spend what you have not deposited.
Difference #2
When making a purchase with a credit card, the card is simply swiped through the machine. You do not have to enter a pin number and you do have to sign a purchase receipt. When using a debit card for the same purpose, you must enter a pin number to complete the transaction. Some places will require a signature as with a credit card while others do not.
Difference #3
When you use a debit card you are not paying any interest. Since it is already your own money you will, in fact, be gaining interest on it. However, all the charges you make on your credit cards come with an interest rate unless you pay off the entire balance before the statement comes out. This is one downside to credit vs. debit cards and why many people prefer to use debit whenever possible. No interest means less money to be paid out in the end.
Difference #4
Anything you buy using your credit card is fully covered according to certain regulations, which state that you are not liable for any activity made on the card that is fraudulent. What this means is that if your card is used by someone else without permission, or is stolen and used, you are not responsible to pay what is owed. It also states that you are not responsible for paying for items that you ordered but never reached you.
This is not how it works with debit card purchases. When unauthorized charges are made to this type of card, there are a few things that can help you out a bit. If you notice the charge within the first two days after it was made, you can dispute it with your bank and get compensated up a certain amount. The longer you wait the more of the purchase you are liable for. Most of the time you must contact the merchant that billed your debit card in order to get things cleared up in your favor.
Overall, it seems that using debit cards are a better idea for basic, every day purchases. Credit cards are more favored for emergencies. Of course there are upsides and downsides to both so consider all things before choosing which one to use for your purchases.
Click here to compare credit card offers, including 0% APR, 5% Cashback offers
Leave a Reply