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Debit cards and credit cards are both popular payment methods that allow consumers to make purchases without using cash.
While both types of cards offer convenience and security, there are some key differences between them.
Knowing the Difference
One major difference between debit cards and credit cards is how they are linked to your bank account.
Debit cards are directly linked to your checking account, which means that when you make a purchase with a debit card, the money is immediately taken from your account. Credit cards, on the other hand, are not directly linked to your bank account.
Instead, they allow you to borrow money from the credit card company and pay it back at a later date.
Fraud and Fees
Another key difference between debit cards and credit cards is the potential for fraud.
Because debit cards are linked directly to your checking account, any fraudulent charges made with a stolen debit card can result in the immediate loss of your funds. Credit cards, on the other hand, offer more protection against fraud. If your credit card is stolen, you can report the theft to the credit card company and they will generally refund any fraudulent charges made on your account.
In terms of fees, debit cards and credit cards also differ. Debit cards typically have lower fees than credit cards, since you are not borrowing money when you use a debit card.
Credit cards, on the other hand, often have annual fees, late payment fees, and other charges that can add up over time.
Debit Vs Credit
When it comes to building credit, debit cards and credit cards have different effects. Because credit cards are a form of borrowing, using a credit card responsibly can help improve your credit score.
This can be useful if you want to apply for a mortgage or car loan in the future. Debit cards, on the other hand, do not have any effect on your credit score.
Overall, debit cards and credit cards both have their advantages and disadvantages.
Debit cards are a convenient and secure way to make purchases without using cash, and they typically have lower fees than credit cards.
Credit cards, on the other hand, offer more protection against fraud and can help improve your credit score. It’s important to weigh the pros and cons of both options before deciding which type of card is right for you.
Newton Federal for Your Banking Needs
This brings our latest entry to a close. As always, thank you for visiting Newton Federal. Have specific banking needs advertised here? Don't hesitate to reach out to us via our contact page. One of our lenders will gladly guide you to the most pertinent information for your needs.
