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Which Is Better: Credit or Debit Cards?

Updated on January 11, 2011

In our world of modern technology, more and more people are using debit and credit cards as opposed to writing checks. Debit and credit cards are simply easier and faster to use than writing out a check. Although credit and debit cards are two completely different cards, they can both be used at any store that accepts the type of card they are, such as Visa, MasterCard, or Discover. In order to decide which card is best for you, you should know the differences between them, as well as the pros and cons of each. Personally, I prefer to use a debit card as opposed to a credit card - if at all possible - to avoid paying interest my credit card balance. Deciding which card to use has to be a personal decision for each individual to make based on what works best for them and their lifestyle.


Some of the Main Differences Between Credit and Debit Cards

  • Credit card transactions post to your credit card account after they are processed. At the end of a month you will be required to pay at least a minimum payment of the balance on your credit card. If you do not pay off the whole balance, your card will incur interest on the remaining balance. Credit cards typically suck you in by offering a promotional low interest rate for the first six months or so, but the interest may sky rocket on you without warning at the end of the allotted time. If you are in debt already and only able to make the minimum payments on a high interest credit card, it will take you a much longer time to pay off your credit card than it would if you were making more than the minimum payment alone.
  • Debit cards are tied to your checking account. After you use the card, the money is immediately taken out of your checking account.
  • Debit cards can be PIN-based (meaning you use your own four digit personal number when you use your card) or signature based. Credit cards can only be signature based. The only time this will really make a difference to you is when you want to take money out of an ATM. You have to use a PIN number to withdraw money from an ATM, so a debit card is the only card you would be able to use. In order to get money off of your credit card account you would need to do a cash advance. On most credit cards there is a high fee based on how much your cash advance is. For a debit card withdrawal from an ATM you could pay anywhere from about $1 to $5, and some banks are free. Debit cards are definitely save you money in this aspect!

Similarities of Debit and Credit Cards

Although there are several differences, there are also several similarities between credit and debit cards:

  • They are both plastic. Although this may be blatantly obvious, it can be harder for some people to keep track of how much they are spending if they are not using cash. As I have always heard, it is harder to part with cash than to just hand over a card and feel like you are losing nothing. I know that this is true for me, but I'm sure it is different for everyone, you jsut have to decide what will work better for you personally.
  • Both can be used to make online payments.
  • You will get charged a fee if you use too much money - no matter which card you use. With a credit card, if you go over your set credit limit, you will get charged a fee for spending over the limit. With a debit card, if you overdraw your checking account, you will also incur a fee. The fees on debit and credit cards can vary greatly, and largely depends which financial institution you are using. The average fee at most banks is around $20-30, and a credit card fee is about the same. One important difference: spending more than your credit limit on a credit card can adversely impact your credit score, something you definitely do not want to happen! Just having one late payment on your record can stay with you for the next several years, and affect your chances of whether or not you may get approved for a loan.

Which do you prefer to use: A debit card or a credit card?

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    • seigfried23 profile image


      7 years ago

      The simple thing would be for people to really, truly see a credit card for what it is: NOT your money! It really is on CREDIT, and you often pay more for it when you're able to pay it back. I wouldn't borrow $100 from a friend for those dazzling pair of shoes I "need", so don't borrow it from a stranger! Nice hub

    • Donna Janelle profile imageAUTHOR

      Donna Janelle 

      7 years ago from Oklahoma

      Thanks Katie! I also try not to use my credit card unless absolutely necessary...I find it's easier that way for me personally :)

    • katiem2 profile image


      7 years ago from I'm outta here

      Now this is a very interesting look at how we can utilize both a credit card and a debit card. It certainly helps us to realize the power and or need for both. I use my debit card like a credit card all the time. I find I have very little need for my credit card. It has a zero balance and the fact that I keep it lock in a safe helps... Well Done! :) Katie


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