Most people have at least one credit or debit card in their wallet. These are both convenient and offer financial protection. It is their differences that can impact your pocket. They might look alike but where do they differ?

The Difference Between Credit and Debit Card

Debit Cards

These cards link to your bank or credit union account. Whenever you use this card, the money is withdrawn from your – account. Debit cards will allow people to spend the money that they already have in their account. These cards require using a PIN when you make a transaction. Many financial institutions are now offering rewards and cash back for using their debit cards.

There are two types of debit cards that don’t require the users to have a savings or checking account.

  • There are EBT cards or Electronic Benefits Transfer Cards that are issued by federal and state agencies. They allow users to make purchases using their benefits.
  • There are also prepaid debit cards that allows people to make purchases without access to a bank account. They have to load a certain amount to the card.

Credit Cards

These cards are different from debit cards because when you use this, it’s like a loan. If you use this card, you are spending money that you don’t have. It’s an interest-free loan if you pay the credit card bills on time every month. A credit card isn’t connected to your bank account. Instead, it’s connected to a financial institution that has issued that card. Credit cards will allow you to borrow money from the issuer of your card to purchase items.

There are four categories of credit cards that are issued. There are:

  • Standard credit cards that extend a line of credit to their customers
  • Reward cards that offer cash back, points and other different benefits to the card users
  • Credit cards that are secured and need a cash deposit for collateral
  • Cards with no spending limit but don’t allow unpaid balances to carry over from one month to another

Debit Card Advantages

Consumers who want to be more careful about their expenses will prefer to use debit cards. With debit cards, there are minimal or no fees. Unless the consumer goes overboard with spending more than what they have in their account. This is unlike credit cards that charge annual fees, overdue fees, over-limit fees, and other penalties.

With debit cards, you can control the way you spend your money. Knowing that every time you use your debit card, your money in your account will deducted while you are earning rewards.

Credit Card Advantages

One of the main advantages that users can get with a credit card are rewards. By using credit cards, consumers can reap discounts, cash, travel points, and so many other perks. Credit card users who pay off their bills on time per month can profit.  They make their monthly purchases through their rewards cards.

Another advantage in using credit cards is it can build up a person’s credit score and history. Credit scores reflect on the user’s credit report which they use when applying for loans.

Credit card usage will also have warranties and insurance for the items that you purchased. So if you bought a defective item, you can do a check in with your credit card company and see if they will cover the expenses.

Credit cards will also offer consumers greater protection compared with debit cards. In case of theft or loss and the user reports it immediately within 48 hours, the user will be only liable to $50 of purchase. After 48 hours, the user’s liability will increase up to $500.


Shoppers who want to control their spending habit need to determine which will work best for their financial needs. Debit cards will protect people who are frugal with their finances. Debit cards will also make sure those big spenders to think twice about making their purchase.

If you are still having a hard time differentiating the two, remember that paying using a debit card is similar to paying using a check. The money is deducted from your savings or checking account. While credit cards uses credit which allows the consumers to carry balances from one month to another.

Choose wisely. If you are looking for a credit card or debit card, try visiting Calcite Credit Union and see which benefits they can offer.