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Credit Card Vs Debit Card 

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Credit and debit cards might seem identical, but they each serve different purposes. Understanding when and how to use each can boost your credit history and keep your debt level under control. While both cards help you make purchases, they pull funds from different sources, and this shapes how you use them.

Credit Card

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Credit card is a financial tool that allows you to borrow money with certain limits, usually to make purchases or simply withdraw some cash. With a credit card, you’re expected to pay back the borrowed money. In most cases, when you pay off your balance in full for each month, you won’t have to deal with interest charges.

Debit Card 

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On the other hand, a Debit card is directly linked to your checking account. So when it’s used for purchases or cash withdrawals, the money is directly taken from your account. While credit cards let you borrow money, debit cards are designed to only let you spend the money you already have.

Credit Score

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This is a major area where both cards differ. For credit cards, paying off your balance can help improve your credit score. However, a debit card doesn’t have any impact on your credit score or credit history, no matter how you use it because it’s linked to money in your checking account. 

Origin of Funds

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The source of the money you spend when you use these cards differs. You are essentially borrowing money from a credit card company when you use credit cards; money you have to pay back. With debit cards, the money comes from your checking account.

Perks and Rewards

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They both offer certain perks that are different in nature. Using a credit card may come with rewards like earning points, gift cards, and cash back. But with debit cards the main reward is easy access. Users get instant access to funds and cash backs from purchases.

Possible Charges

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Credit and debit cards may have charges, but for different reasons. If you don’t pay up your balance or if you pay late, your credit card issuer can charge an interest. On the other hand, debit cards don’t charge interest, but may have fees for spending more than you have in your account.

The Nature of Spending

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Your spending behavior may change based on which card you’re using. If you’re using a credit card, you may go over budget since you’re allowed to borrow. But with a debit card, you only spend what you have, so spending limits are tight and you can’t go over budget.

Access to Funds

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These cards vary in terms of how much funds you can access at any given time. With a credit card, you can get more funds but there’s a limit. It is basically a cap on how much money you can borrow. Debit cards, however, allow you only withdraw what you have; trying to go above that will accrue fees.

Fund Deduction

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There’s a big difference in how funds are deducted when you use either of these cards. For credit cards, the credit card companies handle payments to vendors for your purchases. But when you use a debit card, the funds are directly deducted from your bank account.


Written by Jace Lamonica

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