Credit Cards vs. Debit Cards – What’s the Difference?

There’s a popular TV commercial that ends with the line, “What’s in your wallet?” Of course, the ad is referring to the credit card it’s promoting.difference-between-credit-cards-vs-debit-cards

But for many consumers, what’s in their wallets is usually a mix of credit cards and debit cards. So, how do they pick which one to use? Is there really any difference between a credit card and a debit card? You bet there is.

To get a better understanding of how the cards differ, here’s a glimpse at some of the benefits associated with using credit cards:

And using a debit card has its advantages as well:

  • Debit cards can help keep you out of debt. That’s because the cards are linked directly to your bank account, unlike a credit card where you’re essentially borrowing the money. So, as long as you keep a close eye on how much money you have in your bank account to avoid accidental overdrafts, you’ll only spend the money you have and avoid costly fees. With a credit card, it’s easy to rack up interest fees on the money you’re borrowing, unless you pay back the full card balance each month. Paying with a debit card can also help you avoid other common credit card charges like late payment fees and annual fees.
  • With a debit card, you don’t have to worry about paying yet another monthly bill. But be sure to always keep an eye on your account activity and statements. Doing so will help you to spot any suspicious charges early on, and can also prevent you from overdrawing your account. Reviewing your bank account activity is easier than ever now that most banks offer online banking and mobile banking to their customers.
  • While debit card rewards programs can be hard to find, they are out there. Luckily, Bank5 Connect has a debit card rewards program called UChoose Rewards®. Bank5 Connect debit card holders earn 1 point for every $2 spent on signature-based, online, or PIN-less transactions made with their cards.

Ultimately, which card you choose will depend on your personal financial picture, as well as the kind of purchase you’re making. Knowing how your credit and debit cards differ is the first step in selecting the one that’s right for you!

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