by Sophia Gustafson
Credit cards and debit cards look very similar when you first put them side by side. They both have a specific number, are layed out in the same format, have a pin, and expiration dates. So what is the difference? How should I know which one to use?
One of the main differences of a credit card vs a debit card is where the money comes from. With a debit card, the money comes straight from your personal savings account in your bank. You can only spend as much as you have, otherwise it’ll be declined. With a credit card the money comes from the bank that provided your card. You get sent a bill monthly and you have to pay a minimum fee and whatever you don’t pay back immediately you have to pay back later with interest. Credit cards also have a limit, but not like your debit card. Credit cards have something called a Credit Limit, which is how much you can spend before your card is “maxed out”. That is based on your credit score, your credit history, and your income.
Another main difference between the two is the credit aspect. With a debit card it doesn’t affect your credit, and you earn little to no rewards. With a credit card, if you use it responsibly, you can boost your credit score, which can help you be trusted with your bank to take out a loan later, for example like a house loan or for college. Credit cards also normally have some sort of theft coverage and rewards like cash back on certain purchases.
There are certain fees that can come with attaining a credit card, such as a late fee for paying your bill too late, an interest fee which is obtained when you don’t pay your balance in full and is often how most get into deep credit card debt. You can also have annual fees for covering rewards or different offers that you can access, although not all cards have annual fees. Another huge fee is the Over the Limit fee. When you go over your credit limit, which can come with some huge disadvantages such as huge debt and can ultimately ruin your credit score if hit too badly.
On the opposite side, a debit card has little to no fees. If you have fees, the main two would be an overdraft fee, where you spend more than the amount of money in your savings account, or an ATM fee, a fee for using an ATM to draw out cash from your account. Other than that, you shouldn’t have to worry too much about fees with a debit card.
Now that you know the main differences between a Debit and a Credit card, what card do you think is best for you? Do you want to build up your credit, or do you want to be able to have no interest and little to no worry about different fees? Everyone is different, but there is a card out there for everyone.
Works Cited:
Cussen, Mark P. “What's the Difference Between Credit Cards and Debit Cards?” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/articles/personal-finance/050214/credit-vs-debit-cards-which-better.asp.
Ganotis, John. “8 Common Credit Card Fees Explained & How to Avoid Them.” Credit Card Insider, 24 Apr. 2020, www.creditcardinsider.com/learn/credit-card-fees-explained/.
Ganotis, John. “Credit Card vs. Debit Card: Why You Should Choose One Over the Other.” Credit Card Insider, 18 May 2020, www.creditcardinsider.com/learn/debit-cards-vs-credit-cards/.
O'Shea, Bev. “What Is a Good Credit Score?” NerdWallet, 4 Sept. 2020, www.nerdwallet.com/article/finance/what-is-a-good-credit-score.
“What's The Difference Between A Credit Card and a Debit Card?” What Is the Difference Between a Credit Card and a Debit Card?, 13 Sept. 2019, www.ssbpgh.com/ssb-news/what-is-the-difference-between-a-credit-card-and-a-debit-card-3264.
I wonder in what situations are the best to use either card. I do know that credit cards are good for emergencies when you don't have the cash on you, but what card is the best when buying online? Which card is better when ordering takeout? I am sure in some situations it doesn't matter too much, but when dealing with one's financial ordeal, some events might call for the right card.
ReplyDeleteBefore reading this article, I’ve always wondered what is the difference between a credit and debit card. This article helped me understand what the differences between both are. You asked what card you think is best for us, and I think that after reading this, a debit card is the best card to use/have. I think that debit cards are better to use because it’s not impacting your credit score and it’s taking from your own money and not money that you’ll have to pay back in the future.
ReplyDeleteThank you for outlining the differences for me. Something I would still like to know is which card is better to use on larger purchases. If you have the funds in your checking account use that, or go with the credit card and pay it later? Overall a very helpful post that helped me to understand more about Debit and Credit Cards.
ReplyDeleteI really appreciate the detailed explination that you gave on each card and the benefits to each of their uses. Personally, I have never really understood what a credit card was and how to use one - but your article really helped to point out some of the obvious uses and benefits to the individual cards themselves. Right now, I have my own debit card that allows me to store my money safely and also allows me to mangage my account. While a credit card is something that interests me, I think that the best option, at this point in time, is a debit card. With a debit card I don't have to worry as much about fees and unknown expenses. With my debit card I am able to spend my money, save it, moniter it, and not worry about it impacting my credit score. Yet, I do think I will be getting a credit card in the future once I feel it could be beneficial.
ReplyDeleteIn the beginning of the summer, I got my first debit card so that my paycheck from my job could directly go into my high school savings account linked to my debit card. Now let me tell you, it is so much more convenient and efficient to use compared to holding onto cash--and probably a lot safer! I never knew the exact difference between debit and credit cards, but this article made it much more clearer. For example, I never knew that credit cards have a maximum that you can spend (I thought you could just keep spending, but if you don't pay it back, you get a fee and interest rate). I think I will just stick with my debit card for now, or at least until I get a stable income that I know I can rely on so that I feel more comfortable using my credit card. Do you have a debit card and/or a credit card? What do you like the most?
ReplyDeletethis blog has so much insight for me. about the differences between these 2 cards. i do have some questions though that i think you missed to talk about. does it matter what purchases you make on any card are you limited to certain transcations. when do you think a person should start getting a credit card scorce. at a young age?. these are just some tips to maybe include. this pieace is aswosme very informative i learned alot about both.
ReplyDeleteThank you for letting us understand the difference between a debit and credit card. I've always had some recollection of what a debit card does and as well as a credit card. However, this article have me a lot more insight and depth as to what they really are. I'd definitely say that after reading this article, I'd suggest using a debit card to anyone who's starting out simply because it comes with less responsibility like a credit card does. But, even though considering getting a credit card could be scary it's not as scary if you were to set up automatic payments which would just deduct money from your personal account and pay the bill itself. Lastly, my question to you, would you ever consider getting a debit card knowing that there is an easier way to pay off your bill with automatic payments, or would you not want to risk it?
ReplyDeleteI got a debit card roughly two years ago, and I never knew the difference between a credit card and a debit card until I read Sophia's post. Her post was easy to understand and got right to the point. Truthfully I thought credit cards were only for adults while debit cards were for minors, with the knowledge after reading Sophia's post I have a better understanding of what it's truly for. I had prior background knowledge of credit score with the help of Amanda's post, but after reading Sophias, she went further in the depth of the purpose. Overall, the blog was well written, and to answer one of her questions, I think having a debit card is the best for me right now because I don't want to misuse a credit card if it's not necessary.
ReplyDeleteI had no idea what a credit score was before reading this although I still have many questions. For example, what are some things is can do to raise my credit score and what happens in i'm unable to pay my bill? But altogether this helped clear up most of the questions I had about credit and debit cards.
ReplyDeleteThroughout this summer and the beginning of the school year I did not know many differences between a debit and credit card. With getting older and having to pay your own expenses, it is important to have your own credit or debit card but, it is vital to know the differences between them. In the beginning of last number I got a debit card in order to be able to pay for my own things. Just this week I ended up getting a credit card so that I can build up a credit. According to Investopedia, “Credit cards offer better consumer protection through warranties and fraud protection but are costlier.” This is one reason why I started a credit card instead of debit in order to over more protection. Do you think a credit card and debit card are better for people depending on their age?
ReplyDeleteThe thought of having a credit card has always been kinda scary for me because your basically spending someone else money that you'll have to pay back at the end of the month. Where I would prefer to just spend the money I know I have on my debit card. But I know that soon I will need to apply for loans for college and other expenses coming my way. So a simple solution I have thought of to help me get a good credit score without owing too much money, is to get a credit card through a store like target and buy a few little things a month on it, therefore it won't be a large scary number I'm dreading to pay.
ReplyDeleteI thought that comparing debit and credit cards was a great topic to understand for our age. Many of us use debit cards because it is easier and less stressful to keep track of the payments. The idea of having a credit card has always scared me because it is very easy to go over your limit and not realize what you have all purchased. According to nationaldebtrelief.com, the #1 problem with credit cards is that it is easy to forget to make your payment. If you don't realize quickly and make the payment then your credit score could be severely damaged, therefore it is very important to keep track of your payments. I thought this was very well written and compared the pros and cons of credit cards and debit cards exceptional well. Great work!
ReplyDeleteI knew that there were differences between credit and debit cards, but I never really understood what they were or how much of an impact they could have. I never realised that banks basically loan you money on a credit card. I also didn't really know that a debit card doesn't impact really anything besides how much money is in your bank account. I thought that you could earn rewards with a debit card but I guess I was wrong. I also realised that if you don't make payments on time with a credit card it can impact many aspects of your life.
ReplyDeleteThis is a very interesting topic because many people know the basic differences between a debit card and a credit card, but don't know the significance in those differences. I didn't know that with credit cards, there is a sort of theft coverage or rewards. It's very educational that you included the different types of fees that come with obtaining a credit card, as well as the fees that come with obtaining a debit card and what actions would cause those fees to be charged. My question relates to rewards for credit cards: what does the cash back on certain purchases mean and how does it work? What kind of purchases?
ReplyDeleteI remember growing up through grade school, they tried to teach us this topic in about 5th grade. Although it is very important knowledge to know, I feel like none of us remembered it because we were so young. Now, relearning it, is so helpful. I feel like as older parents start to give their teenage kids debit/credit cards, it gets just that much more important to know this information. But then you get to the question of, is it better to give your teenage child a credit card under your name to raise your credit score by getting more use out of it but put a limit on the credit card, or is it better to give them a debit card so that there is no risk of a change of credit score and the debit card has a limit? What do you think? My mom gave me a debit card that links to my checking account and my savings account but my mom also puts some of here money on the card for gas and some food, but I also have friends who have credit cards and I always just thought it was because it was easier for the parents to give them their credit card but maybe they had deeper reasons! I am always interested to hear other people take on situations that everyone faces.
ReplyDeleteBeing a teenager with a minimum wage job, I feel that having a debit card is the best option especially since having a good credit score isn't as important right now as it is for adults. But since many of us are going to become independent very soon, knowing the difference between a Debit Card and Credit Card is important to know. I feel that people shouldn't make the choice to get a Credit Card until they are 18 and on their own. I feel that this gives them a good head start on saving money and building a good credit score when they are younger, but not too young where a Credit Card is unnecessary. What are your thoughts? What age do you think is the proper age for one to get a Credit Card?
ReplyDeleteFirst off, I really like how clear your comparison was as in your writing it was organized well and the comparison chart you had was also very helpful. I agree with many others here in the comments that for now, Debit cards are a much better option for us. However, I am still curious about the best time to transition from a debit card to a credit card. Is there a minimum age for when you can start building credit? Do credit card bills get mailed or is the money automatically taken from your account? Also, are all credit cards the same or do some have different rewards that we would find beneficial in college?
ReplyDeleteThis piece was especially helpful to me, as people had only briefly discussed the difference between the two cards before. I would say that personally, I would rather use a credit card, because then as long as I am responsible and pay my bills on time, which I know I will, then I can get my credit score up, which helps me get a higher amount on my card, and more loans and trust from the bank. Now for people who struggle with paying their bills on time or maybe have less of an income so they can’t often, a debit card would probably be better, as your just directly spending your money, so there aren’t many fees, and there’s no bills you have to pay on time so you don’t have to worry about paying interest too. So personally, I would prefer a credit card for the additional benefits like a better credit score and cash back on certain purchases, but I will need to make sure I am very responsible with paying my bills on time!
ReplyDeleteIt is interesting to decide which card to use because everyone has a different opinion. Most people I know use a credit card. However, I saw a video where billionaire Mark Cuban was giving tips on business and money and he said to always use a debit card and stay away from credit cards. Maybe he doesn’t trust a lot of people and thinks that they will have to pay the late fee or the over the limit fee, this is problematic with interest and fees racking up. However, if you are responsible then I feel like a credit card is a great choice because there is opportunity for those rewards. There are trade-offs to both types of cards and those trade-offs definitely play a factor in which card people decide to use.
ReplyDeleteThe difference between the two is much more clear, but what about for larger purchases like a car or a house? I don’t think you’d use your credit card, because of the limit. Would I use a debit card? A card at all? Questions for a different time. At least I know how to use the two!
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