Credit and debit cards are two very different forms of payment card that are used in place of cash to pay for things you buy, either at a grocery store, online or wherever they are being accepted as a mode of payment. In terms of similarities, both cards are convenient and took almost everywhere. They are both made of plastic materials, both offer you know some kinds of fraud protection and security, especially when compared to cash transactions these days, right?

However, if I may ask, do you know the advantages and disadvantages of each of these cards? And if you’re aware of that, what makes them different from each other?  Well, in case you never knew, a lot is separating the two cards, and that’s why today, we’ll not only talk about the differences between credit cards and debit cards but when it’s best to use each one of them.

Basic Difference

Debit and credit cards are very different. A debit card allows you to spend money already in your checking account, while a credit card, on the other hand, will enable you to buy things with borrowed money and pay it back later. Those are basic definitions, but let’s go over some more essential differences.

Other Differences

First, a debit card makes it impossible to rack up debt, unlike a credit card.

Second, debit cards don’t reward you for making purchases, while credit cards do. There’s no comparison here as credit cards offer around ten times better rewards than debit cards do.

The third differentiator is that debit cards don’t report to the main credit bureaus as credit cards do. That means that if you use a credit card responsibly, it can help your credit score, but if you use it irresponsibly, it can hurt it.

In regards to cash, there’s also a significant difference. Debit cards allow you to withdraw money from ATMs for a minimal fee, but credit cards, charge you tremendous fees to withdraw cash, which is also known as a cash advance.  So, opt for debit cards over credit cards if you do need to take out some money.

And finally, debit cards don’t come with other benefits. Credit cards, on the other hand, give you things like rental car insurance, travel protection, and extended product warranties. So, those are the main differences, but let’s talk about when to use each type.

When to Use Debit or Credit Card?

The bottom line is that you should use credit cards on your everyday purchases so that you get rewarded for your spending, while responsibly building credit. Then use debit cards only when you need to withdraw cash, so you don’t get stuck paying high fees.

And now that you’ve seen all the basics, differentiating debt from credit cards, you should have all of the information you need to decide which is better for you, and that which is not. Is the credit or debit card for you? Please share your thoughts with us in the comment section below. Cheers!

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