Dear Early Financial Enthusiast, Have you ever wondered, “What is the difference between credit cards and debit cards?” That is the question of the day. But, before I get started, I want to say “Thank you for reading this. By doing so, you are helping me with my goal of sharing financial literacy. So, I greatly appreciate you.”
Now, on to today’s topic.
Credit Cards and Debit Cards
When I was younger, I had already started collecting credit cards by the time I first became aware of debit cards. So, it wasn’t until much later when I started using a debit card. In fact, when I first heard of them, I couldn’t imagine why anyone would use one, since I just thought of them as a basic alternative to credit cards. But as time moved on and life changed, I found a specific reason to use a debit card. So, I spent some time learning about them. This is what lead me to today’s topic.
So first… before we talk about the differences, let me answer the question…
What are the Similarities Between Credit Cards and Debit Cards?
- Both credit cards and debit cards are used to pay for goods and services.
- They are both the same size.
- Both allow you to purchase online or in person.
- Both have 16 digit card numbers.
- Both have expiration dates.
- Both have magnetic strips.
- Both credit cards and debit cards have EMV chips.
Now let’s look at…
How Are Credit Cards and Debit Cards Different?
- With credit cards, you must meet time eligibility standards, such a income and prior credit history.
- With debit cards, there is no special eligibility other than having the attached checking account.
- With credit cards the money for purchases comes from a line of credit. So you are actually borrowing from a lender when you use a credit card.
- With debit cards the money for purchases comes from money in your checking account.
- Using a credit card can impact your credit score.
- Using a debit card does not impact your credit score.
- When using a credit card, interest is charged on any unpaid portion of the monthly bill.
- With a debit card, no interest is charged.
- With a credit card you can only spend as the credit limit that you are assigned by the lender.
- With a debit card you can spend up to the amount of money that you have in your checking account.
So, there you have it. Now you know the similarities and the differences.
Keep working on both your personal wellness and financial wellness.
Best,
Rich Mom
P.S. Do you want to read more to improve your financial literacy? Check out:
What is a Kasasa Bank Account? (Note: They involve debit cards.)
What is a CD? It’s Not Just Something To Play Music
Don’t Judge a Money Book By Its Cover
Do you have money for investing, but not sure where to start, try Acorns
Not only does the Acorns App help you simplify and automate your investing, it also allows you to boost your investments using your spare change. I love it!
Looking for financial resources? Check out the Rich Mom Poor Kid Resources Page.
Who is Rich Mom?
If you’re wondering who Rich Mom is, check out my “About Rich Mom” page.
Also, please note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
The information shared here is not intended as financial advice, just encouragement.
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