Credit cards and debit cards are both widely used for financial transactions, but there are significant differences between the two.
A debit card is linked to your checking account, and when you use it, the funds are immediately deducted from your account. In other words, you can only spend what you already have in your account. Debit cards can be used to withdraw cash at an ATM or to make purchases in stores or online.
On the other hand, a credit card allows you to borrow money from a bank or credit card issuer up to a certain limit, known as your credit limit. When you use a credit card, you’re essentially taking out a loan that you must pay back, typically with interest. You can use a credit card to make purchases, pay bills, and even withdraw cash from an ATM, but it’s important to remember that you’re essentially borrowing the money you spend.
Another difference is that a debit card doesn’t typically require a credit check or affect your credit score, while a credit card application usually requires a credit check, and using the card can impact your credit score.
In summary, the main differences between a credit card and a debit card are that a debit card allows you to spend only what you have in your account, while a credit card allows you to borrow money up to a set limit, and using a credit card can impact your credit score.