Have you ever swiped your card and had to choose between Credit and Debit, then wondered to yourself, “What’s the actual difference here?” Well, let us break it down for you.
While credit and debit cards may look similar and be accepted at the same places, there are a few stark differences. The biggest of which is that a credit card serves more as a loan. The credit union loans you money through a line of credit, and when you make purchases on the card, you’re borrowing money from that lender that you’ll eventually have to pay back. Hence the credit card statement aka bill that you have to pay back at the end of each month.
A debit card, on the other hand, is connected directly to a checking account and will withdraw money immediately from your bank account. A debit card is convenient because it allows you to spend what money you already have in your account, as opposed to a card where you can pay back your “loan” over time.
Image via Bitsonline.