• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • HOME
  • RECOMMENDED BOOKS
  • FREE TOOLS
  • CONTACT US
  • ABOUT

The Fortunate Investor

Investing, Business & Personal Finance For Wealth Builders

  • Save Money
  • Invest Your Money
  • Get Out of Debt
  • Making Money Online
  • Family & Money
  • Taxes
  • Business
  • Retirement
    • Retirement Calculator
Home » Debit Cards vs Credit Cards

Debit Cards vs Credit Cards

September 13, 2021 By The Fortunate Investor | This article may contain affiliate links. For more information visit our Disclosure

Tweet
Share
Pin
Share
Share

If you’re new to personal finances, you may not know much about the differences between debit and credit cards. On the surface, they seem like the same thing. They’re both little plastic cards that you can use to buy stuff.

In reality, however, several differences exist between the two options. The question between debit cards vs. credit cards is one that you should understand before getting either card. Fortunately, we’ve got the information you need.

If you want to learn more about debit cards vs. credit cards, you’re in the right place! Check out our guide to get the answers you need.

Debit Cards

A debit card is a method used for payment as an alternative to carrying cash. Debit cards come in two primary types: bank debit cards and prepaid cards. A bank debit card is a card you receive when you open a checking account with that bank.

The debit card links to your account, allowing you to use it when buying new goods. The card immediately deducts the cost from the amount of money you have in your bank account. Learn more about the best debit card options today.

In contrast to bank cards are prepaid cards. These cards don’t connect to a bank account. Instead, you pay a certain amount for the card and use it for transactions. When the balance gets low, you can add more money to the card.

Credit Cards

A credit card uses a line of credit that allows them to borrow money to make purchases. Several credit cards allow you to use cash advances or perform balance transfers. When you use the card, you assent to repay the issuing company the amount that you borrow.

The other crucial fact about credit cards is their interest rates. The average interest rate for a credit card is about 18%, though exceptions exist in either extreme.

As this accrues, your payments will rise. So, if you use a credit card, ensure you stay on top of your payments to prevent interest from accruing rapidly.

Debit Cards vs. Credit Cards

Most people have debit cards and credit cards. The question is, when is it best to use your credit card or debit card for a purchase. As a general rule, using credit cards is best for making large purchases.

However, credit cards also help build your credit score. If your goal is to establish a robust and sturdy credit score, frequent use of credit cards can be a way to accomplish that. If you go this route, remember to monitor your payments to prevent crippling interest from building.

So, when should you use a debit card? Debit cards are helpful tools for people who worry about overspending. Since the card ties to your bank account, you shouldn’t spend more than you have.

Decide Which is Best For You

The choice of debit cards vs. credit cards is one people make daily. When you’re unsure which card to use, assess which one will best further your financial and budgeting goals.

We hope you enjoyed this article! If so, check out our other content today.

  • About
  • Latest Posts
The Fortunate Investor
The Fortunate Investor at FortunateInvestor.com
The Fortunate Investor is the finance half of the husband and wife duo behind this website. Michael's finance and investment advice is rooted in an MBA and 20 years experience as an entrepreneur, banker, and manager in the financial services industry.
Latest posts by The Fortunate Investor (see all)
  • Should You Hire a Dog Walker? - May 17, 2022
  • What You Should Known Before Starting Your Investment Process - May 16, 2022
  • The Brief Guide That Makes Switching Banks a Simple Process - May 16, 2022

Primary Sidebar

Popular Articles

Stop Making These Organic Optimization Mistakes

Stop Making These Organic Optimization Mistakes

Organic traffic is one of the most valuable types of traffic a business can receive, accounting for … Read More about Stop Making These Organic Optimization Mistakes

Get Into the Wood Industry Insider Tips for Success

Get Into the Wood Industry: Insider Tips for Success

The wood industry is a multi-billion dollar market that is always in demand. Furniture, … Read More about Get Into the Wood Industry: Insider Tips for Success

4 Powerful Ways to Support Your Company Branding Efforts

4 Powerful Ways to Support Your Company Branding Efforts

As an organization grows and its brand becomes more recognized in the marketplace, it is important … Read More about 4 Powerful Ways to Support Your Company Branding Efforts

What Buyers Look For In A Prospective Property

What Buyers Look For In A Prospective Property

If you’re about to put a house on the market, whether lived in or a simple investment property, … Read More about What Buyers Look For In A Prospective Property

Should You Hire a Dog Walker?

Should You Hire a Dog Walker?

If you're among the roughly 38% of Americans owning a dog, you might need some help with the … Read More about Should You Hire a Dog Walker?

Footer

TOPICS

SAVE MONEY
INVEST MONEY
REDUCE DEBT
MAKE MONEY
FAMILY & MONEY
TAXES
START A BUSINESS
RETIREMENT

THE FORTUNATE INVESTOR

ABOUT US
ADVERTISE
CONTACT US

The Fortunate Investor focuses on personal finance topics to build wealth. Topics include saving money, investing, managing debt, family and money, taxes, making money, college planning, starting a business, coupons and retirement.

SOCIAL MEDIA

FACEBOOK
TWITTER
PINTEREST
INSTAGRAM
YOUTUBE

Copyright © 2022 Fortunate Investor. All Rights Reserved. | Disclaimer & Disclosure | Privacy Policy | Terms of Service