Credit Cards vs. Debit Cards

It's a question many shoppers are faced with every day, but what does it actually mean?

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A debit card uses a pin, a personal identification number, to complete the transaction. A credit card withdraws the money directly from your account and then prompts a signature at the end of the transaction.

If you're trying to save money or manage your finances better, which is the best option for purchases? This answer depends on a range of factors and your own personal finance history. 

Some of the benefits of using a debit card include: 

  • Added sense of security: A debit card requires your pin number to be entered with each transaction, which only you know. This extra layer of security may be better if traveling out of state or in a foreign city.
  • Avoiding interest charges: Using a debt card ensures money is automatically taken from your account to pay the bill. Purchasing with credit options incurs interest fees, which can add up quickly over time if not managed properly. 

Keep in mind though, using a debit card can cause overdraft fees if the withdrawn money isn't actually in the account. Although using your pin for a debit card could be considered more secure than a credit card, fraud protection in general may be different. 

Credit cards also have their own set of benefits. These include:

  • Flexibility: Larger purchases can be made using a credit card, such as during an emergency or the holiday season. These purchases can then be paid for over time on a payment schedule that fits your needs best. 
  • Rewards: Credit cards often offer great incentives such as points, free cash and instant giveaways. 
  • Security: Though different from debit cards, credit cards also have their own layers of security such as warranties or purchase protection.

Using a credit card can have long-term effects if not used in the proper manner. Debt can be racked up easily, especially with just the swipe of a card. Keep debt in mind no matter what the purchase may be. 

Understanding the differences between debit and credit cards is the first step toward using them wisely. To learn more, contact a Bethpage Federal Credit Union expert today.

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