Debit Card or Credit Card: Which Is Better for You?

Sorting out the differences between debit and credit cards

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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

Connected To
Debit Card: Checking or savings account.
Credit Card: Not connected to any bank account.

Monthly Bill?
Debit Card: No.
Credit Card: Yes.

Application Process
Debit Card: Easy, with no barrier to receiving a debit card.
Credit Card: Can be difficult, depending on your credit score.

Spending Limit
Debit Card: Whatever’s in the bank account connected to the card.
Credit Card: Your credit limit set by the credit card issuer.

Interest Charged
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.

Fraud Liability
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).

Credit History
Debit Card: Does not affect credit history.
Credit Card: Responsible credit card usage and payment can improve your credit rating.

Overdraft Fees
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

Will Your Money Last Through Retirement?

No one wants to run out of money. But without goals and a solid plan,
how can you know for sure whether you’re on the right track?

Will I be able to maintain my current lifestyle?

What will my monthly income be in retirement?

Can I protect my hard-earned savings and still
have the income I want?

Rodgers & Associates answers questions like these every day.

Get Personalized Answers
2025 Lititz Pike, Lancaster, PA 17601
Phone: 717-560-3800, Toll-Free: 888-876-3437