Debit and credit cards offer more than a way to access money without having to carry around cash or a bulky checkbook.
Debit cards are like digitized versions of checkbooks;
they are linked to your bank account (usually a checking account),
and money is debited (withdrawn) from the account as soon as the transaction occurs.
Credit cards are different; they offer a line of credit (i.e., a loan) that is interest-free if the monthly credit card bill is paid on time. Instead of being connected to a personal bank account, a credit card is connected to the bank or financial institution that issued the card. So when you use a credit card, the issuer pays the merchant and you go into debt to the card issuer.
Debit cards are like digitized versions of checkbooks;
they are linked to your bank account (usually a checking account),
and money is debited (withdrawn) from the account as soon as the transaction occurs.
Credit cards are different; they offer a line of credit (i.e., a loan) that is interest-free if the monthly credit card bill is paid on time. Instead of being connected to a personal bank account, a credit card is connected to the bank or financial institution that issued the card. So when you use a credit card, the issuer pays the merchant and you go into debt to the card issuer.
Most debit cards are free with a checking account at a bank or credit union. They can also be used to conveniently withdraw cash from ATMs. Credit cards have the advantage of rewards programs but such cards often require an annual fee to use. Financial responsibility is a big factor in credit card use; it is easy to overspend and then get buried in overwhelming credit card debt at a very high interest rates.
This comparison provides a detailed overview of what debit and credit cards are, their types, associated fees, and pros and cons.
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