Question

1. What is the main difference between debit and credit cards?

Answer 1

The main difference is where the money comes from:

- Debit card: When you use it, funds are taken directly from your bank account (checking or savings). You can only spend what you have (unless you have overdraft). No monthly bill—transactions reduce your balance immediately.

- Credit card: It lets you borrow money up to a preset credit limit. Purchases create a balance that you repay later—usually with a monthly statement. If you don’t pay in full, interest is charged and a minimum payment is required.

Other important distinctions (brief):
- Credit impacts your credit history/score; debit generally does not.
- Credit can build credit history; debit cannot.
- Credit offers the ability to carry a balance (and incur interest); debit prevents borrowing beyond your funds (except overdraft).
- Protections and dispute/chargeback handling are often stronger on credit cards.
- Rewards and perks (cashback, travel points) are more common on credit cards.