Debit and credit cards are both used to pay for goods or services without paying in cash or writing a check. The difference between the two is where the money to pay for the purchase comes from.
What's the difference?
When you use a debit card, the funds for the amount of your purchase are taken from your checking account almost instantly. When you use a credit card, the amount will be charged to your line of credit, meaning you will pay the bill at a later date, which also gives you more time to pay.
It can often be complicated to decide when it is best to use each card. For everyday purchases, consider using your debit card because you will see the money taken out of your checking account right away. For bigger items, such as a rental car or hotel room, you could use your credit card so that you can save up money by the time you have to pay.
Advantages of a Debit Card
In addition to the convenience if you don't have cash readily available, debit cards have several advantages for users.
- Avoid increasing your debt. Using a debit card instead of a credit card is a good way to decrease your chances of getting into debt. This payment method should help keep you within your budget and from spending all of the money in your checking account. If you ever do spend more than your checking account allows, you may be charged an overdraft or return fee from your bank.
- Debit cards give you easy access to your cash. You can use your debit card to withdraw cash from ATM machines. Some retail stores will also allow you to get “cash back,” charging more than your initial transaction to your checking account and giving the cash to you with your receipt.
- Pay now to avoid a bill later. Since the money from a purchase you make with your debit card is taken directly out of your checking account, you don't have to worry about a bill coming your way at the end of the month. This also means that you don't have to worry about interest accumulating on that bill. Using a debit card is a great way to control your spending, just be careful to avoid overdraft and return fees!
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Advantages of a Credit Card
There are several benefits of having and using a credit card.
- Credit cards give you extra time to pay for purchases. At the end of your monthly credit card cycle, you will receive a bill stating how much you owe for purchases made in the last 30 days. Depending on when you made the purchase, you have up to a few weeks to pay your credit card bill. Technically, you are only required to pay the minimum fee each month, but this could lead to future debt.
For example, if you spend $1,000 in a month and only pay your monthly minimum payment of $15, and then you spend again next month, you are likely to fall into a debt trap. Each month that you don't pay off the entire bill, there will be a certain amount charged for interest by the credit card company. A helpful tip is to pay off as much as you can each month to earn better credit and avoid building up debt.
- Credit card use builds your credit history. Each time you purchase something with your credit card and then pay it off on time, your credit history will build up. Having good credit is important when you are taking out a loan, or buying a car or house. Paying off your credit card bill each month will show that you are capable of paying off debt and can help increase your credit score.
- Convenient for emergencies. Having a credit card is very useful and convenient when there is an emergency. If you suddenly need to pay for a repair in your house, you can put the charge on your credit card. In this case, you probably did not plan for this expense, so your credit card company will extend you credit until you pay the bill at the end of the month. Again, this gives you a little extra time to pay for something you weren’t expecting to pay.
Benefits of Having a Debit and a Credit Card
Many people have a debit card and a credit card. Since each card has a different use, they utilize the unique advantages and differences between debit and credit cards. Instead of choosing between one or the other, consider getting both!
Interested in getting a debit card?
Apply online for a checking account and receive a debit card with your new account. If you already have a checking account, you can request a debit card by visiting your local branch or by calling us at (800) 480-2265. Learn more about our debit card.
Interested in getting a credit card?
Apply for a Huntington credit card and choose the benefits right for you: get 3X rewards in the category of your choice, earn 1.5% unlimited cashback on purchases, or receive a lower purchase APR than our reward & cashback cards. Learn more about our credit card offerings.
FAQs
Debit cards are linked to the user's bank account and limited by how much money is in there. Credit cards provide the user with a line of credit that they can borrow against as needed and pay back later. Credit cards charge interest on the money the cardholder borrows (unless it's paid back within the grace period).
Which is better a credit or debit card? ›
Bottom line. Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.
What are two disadvantages of debit cards? ›
Disadvantages of a Debit Card
- You can't charge purchases with a promise to pay later: One of the benefits of credit cards is that you can make charges now with a plan to pay off the balance later. ...
- Large purchases can be a hassle: Some debit cards have spending limits that can complicate efforts to make large purchases.
Generally, debit cards don't give rewards or cashback earnings for purchases. Those that do offer very low earning rates compared to credit cards. This means that using a debit card to buy $100 in fuel might cause the cardholder to miss out on a 5% cashback earning promotion from their credit card.
Can a debit card be used as a credit card? ›
Using a debit card to make a credit transaction isn't that different from using it to make a debit transaction. The money still comes out of your bank account. You don't, however, have to enter your PIN, so many people choose credit to safeguard the security of their account.
What are five major differences between credit and debit? ›
Debits are money going out of the account; they increase the balance of dividends, expenses, assets and losses. Credits are money coming into the account; they increase the balance of gains, income, revenues, liabilities, and shareholder equity.
How do I know if a card is debit or credit? ›
You can't tell whether a card is associated with a debit or credit account based on numbers alone. Still, you can usually find that out by looking at the card as most of them have a “credit” or “debit” label somewhere on the card.
When should you use a debit card? ›
A debit card is great for everyday purchases like gas, groceries, meals, clothing, and more. As long as you have enough money in your account, debit is convenient and effective (remember, using a debit card removes the money immediately, so there should be enough in the account to cover the expense).
Why is a debit card not recommended? ›
Debit card transactions are deducted straight from your checking account. If your purchases end up overdrawing your account, you'll face substantial overdraft fees. Worse yet, if you have payments like rent or your mortgage tied to your checking and it is overdrawn, it could cause you to default.
Why do people not like debit cards? ›
Perhaps the biggest con to using a debit card is that it won't help you build credit history or establish a better credit score. No matter your age, this limitation should be at the top of your list of reasons why you shouldn't use a debit card. Even debt-free people open credit cards for this reason.
If you don't have proper security measures in place and the criminal obtains your debit card information, they can use it for fraudulent online or over-the-phone transactions. These types of transactions don't require a PIN or signature, making the criminal's job easier.
Are credit cards safer than debit? ›
Credit cards often offer better fraud protection
With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used. You could be liable for much more for unauthorized transactions on your debit card.
Does withdrawing cash from a debit card affect credit score? ›
Using debit cards
If you're spending your own money with a debit card, that won't affect your credit score in any way. Just bear in mind, if you dip into an overdraft by using your debit card, it could affect your credit score – there's more detail earlier in this page.
What happens if I run my debit card as credit? ›
When you choose to run your debit card as credit, you sign your name for the transaction instead of entering your PIN. The transaction goes through Visa's payment network and a hold is placed on the funds in your account. The transaction usually settles from your account within two to three days.
What is a good credit score? ›
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
What are the golden rules of debit and credit? ›
The three golden rules of accounting are (1) debit all expenses and losses, credit all incomes and gains, (2) debit the receiver, credit the giver, and (3) debit what comes in, credit what goes out.
Why is it called a debit card? ›
Answer and Explanation: Debit cards are known as a debit because they have negative impacts on the account balances of the customers. In other words, debit cards reduce the amount of money from a customer's checking account for the payment of purchases.
When should you use a debit card instead of a credit card? ›
If you find yourself struggling to pay off your credit card, using a debit card may be a better way to manage overspending. "If you have credit card debt, then putting routine purchases on a debit card would make sense in order to avoid going deeper into debt.
Can I get my money back if someone used my debit card? ›
If you notify your bank or credit union within two business days of discovering the loss or theft of the card, the bank or credit union can't hold you responsible for more than the amount of any unauthorized transactions or $50, whichever is less.
Is it safe to use a debit card at a grocery store? ›
Though it isn't always avoidable, paying with a debit card at retail stores can make consumers vulnerable to skimmers. An alternative to swiping your debit card is using a contactless payment method.
Debit cards offer less protection against fraud, as they expose your money to theft, and are harder to reverse transactions or get your money back. However, the best choice depends on your personal preferences and financial situation.
When should you not use credit? ›
If you're approaching your credit card limit, it's in your best interest to stop spending until you get your balance paid down. Carrying a high balance can dramatically lower your credit score and, if you're looking to take out a loan, it doesn't look great to lenders.
Is it better to pay bills with credit or debit? ›
Be aware of any convenience fees you'll incur by paying your bills with credit cards. It's best to use credit only for products and services that won't charge a fee, and using cash, debit or bank transfer for the rest. And, of course, use a credit card only if you know you can pay off the balance each month.
Is it better to have a credit card or not? ›
Key Takeaways. Credit cards can help you improve your credit score, but only if you use them responsibly. Your payment history and borrowing amount are the two biggest factors in your credit score. Secured credit cards are an option for borrowers with a poor credit history.
