You may have heard of the terms debit card and credit card before but do you know the key differences between them and how they are used to pay for goods and services well they both look very similar and are mainly accepted everywhere as a form of payment but they are in fact very different let's start with credit cards a credit card allows you to purchase goods and services on credit in other words you're able to walk into a shop purchase goods and services without any money leaving your bank account or you're able to do this
because you are borrowing money from the credit card provider and you'll have to pay all of this back later as you are now technically in debt but if you fail to pay in full and on time your debt will increase because of the additional fees and interest that will be added to your account credit cards can be very useful if you need to make a purchase but you don't have enough money in the bank especially for emergencies such as paying for the repair of a boiler or a car where you need to spend money which
you didn't plan on spending or you simply haven't got the funds available a great benefit of having a credit card is every time you repay your debt in full and on time your credit rating is positively impacted which is great for your future self when you may find yourself needing to borrow a large amount of money to fund a big purchase such as for a house or a car in addition to this many credit card providers offer loyalty schemes and rewards such as cashback as incentives to use a credit card as a method of payment
let's now switch our attention to debit cards a debit card allows you to purchase goods and services using the money that's in your bank account and it's a lot more like using physical cash but in a more convenient way debit cards are often used for everyday purchases such as groceries and petrol and when you use a debit card to make a purchase the money is transferred directly from your own personal bank account to the business because you're using your own money and you aren't borrowing money from your debit card provider you can only spend what's
available in your bank account so you won't be able to spend more than you can afford to and most importantly it means you won't be in debt with your bank this also means that you don't have to pay any additional fees or interest on any purchase that you make unless of course you have an overdraft arrangement with your bank meaning that you can take your bank balance into a negative figure and borrow money directly from your bank to fund a purchase but this may result in overdraft fees and can be a very expensive form of
borrowing importantly both debit cards and credit cards offer added security and convenience in comparison to using cash but credit cards have higher fraud protection than debit cards
