Understanding the difference between debit cards and credit cards could help you make smarter financial decisions. While both cards are usually accepted at the same place, the main difference is where the money is pulled from.
Debit cards offer the same convenience as credit cards; however, debit cards draw funds directly from your checking account. It may take a few days for the funds to be drawn, so it is important to be aware of your running balance as it can be possible to overdraw your account which may result in fees. Because debit cards are tied to your checking account, using it for every day purchases may prove to be beneficial in sticking to a budget due to limited funds.
A credit card is different from a debit card in that credit cards transactions charge to a line of credit. It gives you the ability to make purchases without having money directly available. Plus, some credit cards offer additional rewards for purchases, like Bridge’s Cashback Visa®. However, it is important to know that if credit card charges (purchases) are not paid off within 30 days, you’ll be charged interest on those purchases. Using a credit card regularly helps to build credit. By maintaining a lower balance and making your regular payments on time, you are establishing a good credit history.