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Debit Card vs. Credit Card: Know the Difference

Shumaila Saeed
By Shumaila Saeed || Updated on December 25, 2023
A debit card directly withdraws funds from your bank account, while a credit card allows you to borrow money up to a certain limit to be paid back later.
Debit Card vs. Credit Card

Key Differences

A debit card is directly linked to the user's bank account, drawing on available funds for transactions. Credit cards, however, represent a line of credit, allowing the user to borrow money from the card issuer up to a specified limit.
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Shumaila Saeed
Dec 08, 2023
Transactions with a debit card immediately deduct the amount from the user’s account. In contrast, credit card purchases are billed to the user, who is then required to pay the credit card company, often on a monthly basis.
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Dec 08, 2023
Debit cards typically do not incur interest charges since they use existing funds. Credit cards, however, can accrue interest and additional fees if the balance is not paid in full by the due date.
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Shumaila Saeed
Dec 08, 2023
Using a debit card has no direct impact on a user’s credit score as it involves accessing existing funds. Credit card usage, however, can significantly affect one's credit score, depending on how they manage their credit balance and payments.
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Shumaila Saeed
Dec 08, 2023
Debit card users can face overdraft fees if they spend more than their account balance. Credit card users have a preset credit limit and may face penalties or declined transactions if they exceed it.
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Dec 08, 2023
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Comparison Chart

Source of Funds

Directly from bank account
Borrowed from card issuer
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Payment and Billing

Immediate deduction from account
Billed later, usually monthly
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Interest and Fees

No interest, minimal fees
Interest charges on unpaid balance
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Credit Impact

No direct impact on credit score
Affects credit score
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Overdraft/Credit Limits

Overdraft fees for exceeding balance
Credit limit with penalties for exceeding
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Debit Card and Credit Card Definitions

Debit Card

A debit card helps in tracking spending directly from the bank account.
She checked her account statement online to track her debit card expenses.
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Dec 02, 2023

Credit Card

A credit card allows you to borrow funds from a pre-approved limit for purchases.
He used his credit card to buy a laptop, to be repaid later.
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Dec 02, 2023

Debit Card

Debit cards facilitate point-of-sale transactions and ATM withdrawals.
She paid for her coffee using a debit card.
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Dec 02, 2023

Credit Card

It's issued by financial institutions, offering a line of credit.
She received a monthly bill for her credit card expenditures.
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Dec 02, 2023

Debit Card

A debit card is a payment card that deducts money directly from a checking account.
She used her debit card to withdraw cash from an ATM.
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Dec 02, 2023
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Credit Card

Credit cards can aid in building credit history when used responsibly.
She improved her credit score by making timely credit card payments.
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Dec 02, 2023

Debit Card

It’s a bank-issued card for convenient access to one’s account funds.
He purchased groceries using his debit card linked to his checking account.
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Dec 02, 2023

Credit Card

Credit cards often provide rewards, points, or cashback on purchases.
He earned reward points for his purchases made on his credit card.
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Dec 02, 2023

Debit Card

Debit cards offer a quick, cashless method to use account funds.
He booked movie tickets online using his debit card.
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Dec 02, 2023

Credit Card

Credit cards accrue interest if the borrowed amount is not paid by the due date.
He paid interest on the remaining balance of his credit card.
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Dec 02, 2023

Repeatedly Asked Queries

Can you exceed your account balance with a debit card?

Yes, but this may result in overdraft fees.
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Dec 08, 2023

Are there fees associated with credit cards?

Credit cards can have annual fees, late payment fees, and interest charges.
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Do debit cards help build credit history?

No, debit card usage does not impact credit history.
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Do debit cards offer rewards or points?

Generally, debit cards do not offer rewards like credit cards do.
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Is it possible to withdraw cash using a credit card?

Yes, but cash advances on credit cards usually come with high fees and interest rates.
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What happens if a debit card is lost or stolen?

You should report it immediately to prevent unauthorized access to your account.
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Can credit card debt be transferred?

Yes, through balance transfer credit cards.
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Do credit cards have spending limits?

Yes, credit cards have a preset spending limit.
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Can debit cards be used for online purchases?

Yes, debit cards can be used for online transactions.
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Can a credit card purchase be disputed?

Yes, credit card charges can be disputed, often with fraud protection.
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Do credit cards improve your credit score?

Responsible credit card use can improve your credit score.
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Are there age restrictions for owning a debit card?

Yes, typically you must be at least 18, or have a co-signer if younger.
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Is it safe to use credit cards online?

Yes, but it's important to use secure websites and monitor for fraudulent activity.
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Can you use a credit card internationally?

Yes, but it may involve additional fees or higher interest rates.
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Can a credit card be used to build an emergency fund?

It’s not advisable; a credit card should not replace an emergency savings fund.
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Is PIN required for debit card transactions?

Yes, a PIN is usually required for debit card transactions, especially at ATMs.
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How quickly are funds deducted with a debit card?

Funds are usually deducted immediately from your account.
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Are prepaid cards the same as debit cards?

No, prepaid cards are loaded with a set amount of money, unlike debit cards linked to a bank account.
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Are there limits on debit card transactions?

Banks may set daily spending and withdrawal limits on debit cards.
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Can a credit card be cancelled with an outstanding balance?

Yes, but you will still need to pay off the remaining balance.
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Shumaila Saeed
Dec 08, 2023

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About Author
Shumaila Saeed
Written by
Shumaila Saeed
Shumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.

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