Skip to main content

Related content

Save
Close save Save

Credit vs. debit: What’s the difference?

Read, 3 minutes

Credit and debit cards may look similar, but their features and uses are very different. Knowing when and how to use each can help you build a stronger credit history and keep your debt levels down.

How credit and debit cards work

Both cards can help you purchase things, but they draw money from different sources. This impacts how you can use them.

Origin of funds

How funds are deducted

Access to funds

Did you know?

Choosing the right credit card is dependent on what you want to get out of it. It’s important to consider the potential fees, penalties and annual percentage rates (APR), as well as the benefits of each.

The effect of credit and debit on your finances

Some people find it easier to manage day-to-day finances with a debit card, but it’s also worth considering the long-term benefits of using a credit card.

Spending

Potential charges

Perks

Credit score

Quick tip

Paying off your credit card balance monthly can help you keep your finances in order and improve your credit score.

Security and fraud protection for your cards

Most credit and debit cards offer you some protections against unauthorized purchases. However, it’s important to monitor charges on both cards regularly.

Fraud protection

Liability if lost or stolen

Reimbursement


  1. Federal Trade Commission.
Close Disclaimer

The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

What to read next

Contact Us