Credit Card Vs. Debit Card - What Are The Main Differences
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Credit Card vs. Debit Card: Understanding the Key Differences
Summary
Gone are the days of rushing to the bank before weekends. With electronic cards, accessing cash and making payments is simple and convenient. You can use an ATM or get cashback at stores like grocery or hardware outlets.What is a Debit Card?
A debit card, often used at ATMs, was once easy to distinguish from credit cards. Initially, debit cards didn’t feature a credit card company logo and displayed only your bank details.Today, debit cards look much like credit cards, even carrying the same logos. You can swipe both at checkout, make online purchases, or pay at the pump. Using a debit card is akin to using cash, as the purchase amount is deducted from your linked account, typically a checking account.
Conversely, credit cards offer revolving credit, allowing you to pay a portion of your bill and carry the balance to the next period.
What is a Credit Card?
A credit card allows you to borrow money from the issuing institution, typically a bank. You agree to repay the borrowed amount plus interest, known as the annual percentage rate (APR). While debit and credit cards may look similar, the levels of consumer protection they offer differ.Credit Cards Offer Better Protection!
Federal law limits your liability for unauthorized credit card charges to $50. If you report the theft before any charges occur, you may avoid liability altogether. Charges made without the physical card, such as online purchases, also carry no liability.MasterCard and Visa provide zero-liability protection, ensuring you don’t pay for unauthorized credit card purchases. Debit cards have similar protections but with key differences. If you report a lost or stolen debit card within two business days, liability is also capped at $50. However, it can rise to $500 if you delay notification, and after 60 days, you could be fully liable for fraudulent charges.
Zero-liability protection applies to debit card transactions that don’t use a PIN. Additional fraud protection may be available through homeowners or renters insurance, so check your policy for details.
Always notify your card issuer by certified letter, return receipt requested, after a phone call to secure your consumer rights.
When to Use Each Card
Experts suggest using debit cards like cash for everyday purchases at grocery stores or gas stations, provided you have sufficient funds.Credit Card Purchase Disputes
Avoid using debit cards for online or expensive purchases, as disputing charges is simpler with credit cards. Credit card companies will typically remove the charge until the issue is resolved.For debit card transactions, you must resolve issues directly with the merchant. When a debit card is swiped, the bank confirms sufficient account funds. In contrast, credit card payments involve the bank covering the merchant and the cardholder settling later.
You can find the original non-AI version of this article here: Credit Card Vs. Debit Card - What Are The Main Differences .
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