Debit Card vs. Credit Card: What’s the Difference?

There are advantages and disadvantages to both a credit card and a debit card. Deciding which type of card is best for you depends on how you plan to use the card and how responsible you are as a cardholder.

When comparing a debit card to a credit card, understand the different benefits, fees, and uses.

Fraud protection

When it comes to the credit card versus debit card debate, both debit and credit cards offer no liability protection on fraudulent purchases. However, the process for getting your refund varies depending on the type of card you use.

In accordance with the Fair Credit Billing Act1The maximum amount you can lose from an unauthorized credit card charge is $50. The investigation will likely be over by the time your statement balance is due.

However, under the Electronic Fund Transfer Act2Your potential debit card loss could be up to $500 if you report the scam more than two days after it happened. Further, the bank may not return that cash to your account immediately.

If you need that money now, you’ll be at the mercy of the bank. In either case, you will not be liable for any amount of the unauthorized transaction if you report the card lost prior to any fraudulent purchases occurring.

Spending control

The winner of the debit versus credit match is fairly straightforward. Since debit cards are linked to a checking account rather than a line of credit, the only way to get into debt with this type of card is to overdraft your account. You can avoid this by opting out of overdraft protection.

It is possible to use credit cards without debt, but the temptation can be difficult to avoid. It is easier to overspend with credit cards than with debit cards.


When comparing credit and debit, it’s also helpful to consider rewards. Rewards are a common feature of credit cards. Finding a debit card with a good rewards program can be difficult.

On the other hand, credit cards offer great profits to financial institutions, so they are more competitive in offering rewards to entice people to use their cards more often. As such, you will likely find better bonuses and great sign-up bonuses with credit cards.


It’s a smart idea to review card rates and fees as part of your application when applying for a credit card. When you do this, you will notice that most credit cards charge a wide range of fees.

Late fees, cash advance fees, balance transfer fees, and foreign transaction fees are all common among credit cards. Some even charge an annual fee. And this is all in addition to the interest fee if you have the balance.

On the other hand, debit cards don’t usually come with many fees. If your checking account charges a monthly fee, you may be able to get the fee waived by using your debit card regularly.

Credit building

Credit cards can help you build your credit and prove that you are a trustworthy borrower. Credit card companies report your borrowing and payment history to the three major credit bureaus – Equifax, Experian, and TransUnion. This helps shape your credit score.

Every time you use your credit card, your credit history is reflected in your credit report. This includes positive things, such as on-time payments and low credit utilization, as well as negative things, such as late payments or late payments. Your credit report information is then used to calculate your credit score.

In contrast, debit cards cannot help you build your credit because you are using your own money. So, using a debit card alone will not help you build or establish a credit history.

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