Debit vs Credit Cards

Hey WalletHubbers! Today we'll talk about the differences between credit cards and debit cards, and when it's best to use each Debit cards and credit cards are very different

A debit card allows you to spend money already in your checking account A credit card, on the other hand, allows you to buy things with borrowed money and pay it back later Those are basic definitions, but let's go over some more key differences First, a debit card it makes it impossible to rack up debt, unlike a credit card Second, debit cards don't reward you for making purchases, while credit cards do

There's no comparison here — credit cards offer around 10 times better rewards than debit cards do Another differentiator is that debit cards don't report to the main credit bureaus as credit cards do That means that if you use a credit card responsibly it can help your credit score, but if you use it irresponsibly it can hurt it And when it comes to cash there's also an important difference Debit cards allow you to withdraw money from ATMs for a minimal fee

Credit cards charge you major fees to withdraw cash, which is also known as a cash advance So you should opt for debit cards over credit cards if you do need to take out some cash And finally, debit cards don't really come with other benefits Credit cards, on the other hand, give you things like rental car insurance, travel protection and extended product warranties Those are really the main differences, but let's talk about when to use each type

The bottom line is that you should use credit cards on your everyday purchases so that you get rewarded for your spending while responsibly building credit Use debit cards only when you need to withdraw cash so you don't get stuck paying high fees Now that we've covered the basics, you should have all of the information you need to decide which is better for you But to find out even more about debit cards versus credit cards, just go ahead and click the button right here