The main difference between debit cards and credit cards is that a debit card is linked to a checking account, while a credit card is linked to a line of credit. When a purchase is made with a debit card, the funds immediately come out of the bank account. When a purchase is made with a credit card, it is “charged” to the credit line to be repaid later.
There are plenty of other differences between the two payment methods. Here are some of the biggest differences between credit cards and debit cards:
Using a credit card builds credit; using a debit card won’t. Credit cards report account information to the major credit bureaus each month, allowing users to build a track record of responsible borrowing. Debit cards are not included on credit reports.
Credit cards give rewards; debit cards generally don’t. Many credit cards give cash back, points or miles in return for each dollar in purchases charged to the card. Some credit cards even have initial rewards bonuses for spending a certain amount within a few months of opening an account. Most debit cards don’t give rewards for purchases – though you can get some nice checking account signup bonuses.
Debit card fraud is more of a headache than credit card fraud. All four major credit card networks – and all 3 debit card networks – have a $0 fraud liability guarantee. But credit card users have time to spot and handle the fraud before they pay the bill, while debit card users pay for fraudulent transactions at the time of purchase. So even though cardholders usually aren’t liable for fraud on either type of card, it may take a while for debit card users to get their money back, while credit card users won’t ever lose the money. Plus, debit card protections are not as favorable if a PIN is used to complete the fraudulent purchase.
Credit cards and debit cards may not look very different. Both debit and credit cards have a card network logo – and these days, both come with an EMV chip on the front for an extra layer of security when making transactions. But they are quite different in practice.
In fact, the differences are big enough to make an impact in the lives of those who use them. Generally, credit cards are better in fraud cases and to build credit, but they also have their downsides. Debit cards give users peace of mind knowing they won’t spend more money than they have, but they also won’t earn rewards or build credit.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines
. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.