Debit and credit cards look almost identical. Each has a 16-digit card number and an expiration date.
But that’s where most of the similarities end.
Debit cards allow bank customers to spend their own money by drawing on funds that they deposited with their bank – a direct draw on their own cash. Credit cards allow consumers to borrow money from the card issuer up to a certain limit in order to purchase items or borrow cash.
The biggest negative aspect of using a debit card is that you are often responsible for fraudulent activity.
Comparing Debit and Credit Cards
Debit Card: Checking or savings account.
Credit Card: Not connected to any bank account.
Debit Card: No.
Credit Card: Yes.
Debit Card: Easy, with no barrier to receiving a debit card.
Credit Card: Can be difficult, depending on your credit score.
Debit Card: Whatever’s in the bank account connected to the card.
Credit Card: Your credit limit set by the credit card issuer.
Debit Card: No interest is charged because no money is borrowed. You are spending your own money.
Credit Card: Interest is charged on any outstanding balance. The interest rate is usually very high.
Debit Card: A PIN makes them secure as long as no one steals the card number and PIN, and as long as you don’t lose the card itself. If the card/info is stolen, debit cards are very insecure.
Credit Card: Credit cards in the U.S. are not very secure because many still use dated card security technology. However, consumers are not held liable for this poor security.
Debit Card: High. If someone steals your card and makes purchases, that money is removed from your bank account immediately. Investigating this damage takes time. Liability depends on when you report the loss. *
Credit Card: Low. Rarely held liable for fraudulent activity. The maximum loss amount you’d be responsible for is $50 (or $0 if you report the card loss/theft before fraudulent purchases are made).
Debit Card: Does not affect credit history.
Credit Card: Responsible credit card usage and payment can improve your credit rating.
Debit Card: High overdraft fees. Possible to overdraw on your account, if you’ve opted in to your bank’s overdraft protection service.
Credit Card: Low.
Debit Card: Usually.
Credit Card: Uncommon in the U.S.
* Limitations vary depending on when you report the theft.
- $0 if you report the loss or theft of the card immediately and the card has not been used
- up to $50 if you notify the bank within two business days after you realize the card is missing
- up to $500 if you fail to notify the bank within two business days after you realize the card is missing, but do notify the bank within 60 days after your bank statement is mailed to you listing the unauthorized withdrawals, or
- unlimited if you fail to notify the bank within 60 days