Saturday, May 18, 2013

Debit or Credit?

Swiping cards makes me feel like a grown-up.
Read this if: 

1) You're not clear what the difference between debit and credit is. 

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I've been asked surprising frequently about the difference between debit and credit. I prefer debit, but responsible handling of credit cards is acceptable as well. I would think that most people have at least a debit card, which most banks give you when you open a checking account.

Debit

A debit card is linked to your checking account. When you swipe your debit card, if you don't have enough in your account to cover it, one of two things happen: the transaction doesn't go through, or it does (in which case, your bank charges you an "overdraft fee" for lending you the extra money). 

Credit

A credit card is not linked directly to your checking account (or any account for that matter). When you swipe your credit card, it's like you are taking out a small loan that you have to pay back later. 

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Photo credit: rocket ship via photopin cc

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