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Although a debit card looks just like a credit card, it works quite differently from a credit card.

Difference Between Debit and Credit Cards
It is possible to use a debit card as a credit card in most of the cases such as in gas stations, restaurants, and many other merchants. But the difference between the both is that a debit card instantly withdraws

money from your bank or investment account to pay for any purchases made with the card, and thus, there is no credit involved.

In contrast, credit cards allow a customer to make purchases until a set spending limit is reached, after which a statement will be sent out with the balance and available payment options.

When using a debit card, the purchases are instantly deducted from the consumer’s account, and thus the consumer never spends more than what they have available in the associated account.

Bank Cards or ATM Cards
Many banks offer debit cards, which can also be called bank cards, check cards, or ATM cards. These cards are available after you open a checking or savings account. The cards are tied to the cardholders’ account, and allow the consumer to withdraw money at ATMs or make purchases with merchants worldwide.

Advantages and Disadvantages of a Debit Card
The biggest advantage of using a debit card is that you can only spend what you already have in your bank account. This does not allow you to accumulate any debt and paying any finance charges.

A disadvantage of debit cards can be that they don’t offer the same rights that most credit card companies include in their contracts. Important factors such as buyer protection, fraud protection, hassle-free returns, error resolution, and many more are not included in debit card contract.

A debit card can prove beneficial in many situations, and should be used in place of credit card where applicable. A debit card comes in handy when you need cash, or if a merchant doesn’t accept credit, such as at certain low-cost gas stations and other institutions.

It’s also possible to back up a debit card with a credit card issued by the same bank. The credit card can act as overdraft protection in case you spend more than what’s available in your bank account. It’s usually free, and offered by most banks as a way to avoid unnecessary fees that arise when you’re overdrawn.

But do remember that a debit card won’t be reported to the credit bureaus, so you won’t be building your credit history.

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