Difference Between Debit Card and Credit Card

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Difference Between Debit Card and Credit Card

What do you consider to be the principal difference between a credit card and a debit card?

There is a huge difference between a debit card and a credit card.
A debit card spends money that you already have in your bank account. If there is no money in your bank account, the debit card will not work.

A credit card lets you borrow money that you don't have and pay it back.
Some people lose sight of the fact that it's borrowed money and that is how they get into debt.

The principal difference is that a debit card uses your money and a credit card uses the bank's money.

I prefer debit cards because I can limit myself, with credit cards you tend to splurge without realizing it. Also credit card companies charge fairly high transaction fees (depending on the company) which you don't need to pay for most debit cards.

Though I'm sure most people tend to splurge without realizing it, the benefits of responsible use of credit cards far outweigh the benefits of debit cards in my view.

Debit cards are certainly more convenient than cash, and easier to carry. But credit cards come with built in insurance, often have cash-back or other benefits, and obviously, allow users to raise their credit scores, which is helpful when trying to secure loans for bigger things like cars and houses.

The biggest difference I've seen and enjoyed is the security. When we had a credit card, the limit had been set at $25k. A few times over the years, there were unauthorized purchases from the number having been stolen after shopping at various online stores. The thieves *could* have spent 25 thousand dollars in a short time and it would have been a *nightmare* to pull out of. Of course we wouldn't have been responsible for it, but you still need to wait for sometimes long investigations before the case is marked closed.

The last time for us it was about 6 months before they sent us an official notice that we would not be responsible for the stolen money. They hadn't even realized that we hadn't had a credit card with them for the past FIVE of those months. And this wasn't some dinky little local place either... it was Chase. For half a YEAR we needed to wait to see if they'd found the problem or not.

With my debit (pre-paid Visa from WalMart, NOT connected to a bank account) I keep about $1k on it at all times and a thief couldn't get more from it than I have loaded on it. There are still insurances/protections and the Visa pre-paids will still fight for you, etc. just like a credit card.

I think some people get "pre-paid Visa debit" mixed up with those "Visa prepaid gift cards" you buy hanging in the checkout line. VERY different items.

Correct! I think this is something that i think every card user needs to know. If you don;t understand the nunaces of how both of these cards work, you could land in trouble.

I think that most people truly believe that they won't "get into trouble" with credit cards. The mindset is that they'll buy something and pay it off really fast.

Only then the lure of the "minimum payment" is there, and while that $10 minimum is being paid, it's likely that $8 more is added in interest charges. It gets out of hand fast. Only if the card is paid off each month will this be avoided.

All good reasons. If "cash back" is offered, rest assured the consumer *is* indeed paying it back in hidden fees and charges *somewhere*.

Credit card companies are not losing a dime for what appears to be "cash back." Consumers are making it up and paying it themselves elsewhere. Guaranteed.

I like reading thread's like this and there are some very good points being made, that being said, the main answer to the question asked at the start of the thread has already been posted (debit is your money, credit isn't) the point about cashback and credit scores are interesting.

I've always been taught never to use a debit card to directly pay for anything and only use it to withdraw cash and anything that needs to be payed for with a card, use a credit card. This is because anything bought with a credit card is covered by insurance even silly things like items not being delivered or card fraud!

I would like to reframe the original question to a more nuanced one, that is, what is the difference between running a debit card as credit and running a debit card as debit, apart from using a pin or signature for authorization? My wife and I have been debating for some time about this and have both been able to find conflicting information from reputable websites. To clarify, my wife thinks running your debit card as credit is a completely different process than running it as a debit card and that it is much safer to run as credit. I think running your debit card as credit simply uses the signature based-networks of the major credit card companies as a trivial convenience to the card user, but that it ultimately still goes through the same exact POS network as a debit transaction.

My understanding is that *dedicated* credit cards could be said to be safer than debit cards because when you use a *dedicated* credit card, it's technically not your money - it's the financial institutions, so they install extra protections in order to cover their own butts from fraud, which by proxy benefits the card holders. Additionally, consumer protection laws are much stronger with *dedicated* credit cards because of the nature of the consumer/financial institution relationship, and that relationship is COMPLETELY different with debit cards, even when running it as credit.

So, separate from the arguments of whether *dedicated* credit cards or debit cards have greater personal liabilities, which takes longer to settle, or which transmits more sensitive data, what is the difference between running a debit card as credit and running it as debit in terms of the transaction process? Does one offer greater protections than the other? What other kinds of advantages and disadvantages are there between them? Are they mutually exclusive, that is, if you run it as credit, find out later that it's been hacked, is your pin now threatened and vice versa?

Interesting questions. I know that I had a claim against my debit card when stole my wallet and used my debit card at several locations that do not check ID. I was not on the hook for any of the money at all. It was a Visa debit card. 

It may sound obvious, but the most important thing probably stil is to know what your card agreement states will be covered, whether it is a debit or a credit card.

Difference Between Debit Card and Credit Card | ConsumerFu


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