Credit Card Và Debit Card

Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho.

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Eric Estevez is financial professional for a large multinational corporation. His experience is relevant lớn both business và personal finance topics.

Have you ever been confused about the difference between a credit and a debit card? It’s easy to lớn see why. Debit cards và credit cards are accepted at many of the same places. They both offer convenience và eliminate the need khổng lồ carry cash. They even look similar.

The fundamental difference between a debit thẻ and a credit card tài khoản is where the cards pull the money. A debit thẻ takes it from your banking account, and a credit card charges it to lớn your credit line.

What Is a Debit Card?

Debit cards offer the convenience of a credit thẻ but work differently. Debit cards draw money directly from your checking tài khoản when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their ngân hàng, và it is transferred lớn the merchant"s trương mục. It can take a few days for this lớn happen, và the hold may drop off before the transaction goes through.

It’s important to lớn keep a running balance of your checking trương mục to make sure you vày not accidentally overdraw your account.

You will have a personal identification number (PIN) lớn use with your debit card at stores or ATMs. However, you can also use your debit card without a PIN at most merchants. You will sign the receipt like you would with a credit card. Below are some other facts regarding debit cards.

You won"t pay interest on your purchases.Your credit history will be unaffected by debit thẻ spending.Paying with debit will take the money from your tài khoản pretty much immediately.

What Is a Credit Card?

A credit card is a card that allows you lớn borrow money against a line of credit, otherwise known as the card’s credit limit. You use the card lớn make basic transactions, which are reflected on your bill; the bank pays the merchant, and later, when you receive sầu your bill, you pay the ngân hàng.

You will be charged intereston your purchases. To avoid paying interest, don"t carry a balance over from month khổng lồ month. Credit cards have high-interestrates, & your credit thẻ balance and payment history can affect your credit score.

Paying on time & in full will help you avoid interest và late fees and maintain or even improve your credit score.

The bank decides your credit limit based on your credit history.Generally, you no longer have sầu khổng lồ sign for in-person credit thẻ purchases. You will owe interest on your purchases if not paid off in 30 days.

Debit Cards vs. Credit Cards

Debit cards make it more difficult lớn overspover since you"re limited lớn only the amount available in your checking tài khoản.

With a credit thẻ, you run the risk of spending beyond your means. Just because your credit limit is $1,000 doesn"t mean you can afford that sort of spending in your monthly budget.

Plus, debit cards offer the same convenience as credit without requiring you to lớn borrow money or pay interest or fees on your purchases. Choosing debit is great for managing your money and helping you live sầu within your means.

On the other h&, some credit cards offer additional insurance on purchases and can make it easier khổng lồ request a refund or a return. However, many companies are reducing or withdrawing these benefits.

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You should carefully read the disclosure information for your credit thẻ to lớn understand the benefits.

Finally, credit cards can help cover you in an emergency, giving you a month lớn come up with the cash before the bill comes due. This safety net could be helpful if you find yourself needing lớn pay for something big before a check comes in but beware: depending on credit for emergency spending sets you up for expensive sầu interest if you can"t pay in full by the due date. A better solution is to keep an emergency fund on hvà.

Choosing the Best Card for the Situation

When trying lớn determine whether khổng lồ use a credit card or a debit card, you should be honest with yourself & your ability lớn handle credit.

If you have sầu spending issues, it is better khổng lồ use your debit thẻ whenever possible, to prsự kiện yourself from falling into lớn credit thẻ debt.

Choosing the best thẻ lớn use also depends on the purchase. Some rental car agencies and hotels make using a debit thẻ impossible, or at least inconvenient. For example, they may require utility bills, personal references, pay stubs, or other proof of ability khổng lồ pay before they accept your booking. You may find using a credit thẻ khổng lồ be less of a headabít.

Using a credit card might also be the better option if you want lớn take advantage of credit thẻ reward programs. But this system only works in your favor if you pay off the balance in full each month.

If you find yourself carrying a balance, you may save sầu in rewards, but you will wind up paying as much or more in interest.

If you"re trying to lớn build up your credit score, choose khổng lồ use your credit thẻ occasionally. Making charges và paying your bill on time will create a record of responsible, creditworthy behavior, which is reported to lớn the credit bureaus and reflected on your credit report.

Fraud Protection

Identity theft and fraud are risks to guard against whether you choose debit or credit. That"s why it"s important to know what protections are included with your thẻ.

If your credit or debit thẻ information has been compromised, liên hệ your ngân hàng immediately. Most banks have sầu a 24-hour hotline you can Call. The sooner you Hotline, the better. You won"t be liable for fraudulent charges made with your ATM or debit thẻ after your report that it is missing or stolen. If someone uses your debit thẻ before you report it lost or stolen, your liability varies depending on how quickly you report it:

Within two business days: up to $50More than two business days but less than 60 calendar days after your statement is sent lớn you: $500More than 60 calendar days after your statement is sent to lớn you: all of the money in your account

Thanks to the Fair Credit Billing Act, the most you"ll be liable for if your credit card is stolen is $50. Just as with a debit card, you should immediately report the card as stolen by calling the thẻ issuer.

After you report the missing card, follow up with a written statement by letter or tin nhắn. Very carefully screen your trương mục for charges you didn"t make & report them to the ngân hàng.

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Monitor your credit report to lớn make sure that your identity was not stolen. If your credit card was compromised, you might even freeze your credit khổng lồ help protect against further fraud.