Debit cards and credit cards can sometimes get new customers easily confused.
The major differences between debtit and credit cards is that debit cards are usually given by your bank where you have a relationship and an account with them, while credit cards you don’t necessarily have to have an account with the bank offering them.
Another major difference between debit and credit cards, which can get confusing for many customers, using a debit card is simply extracting available funds from your account, as if you wrote a cheque in lieu of a purchase and the vendor withdraws the amount from your account, when the check clears.
A credit card on the other hand is basically a loan from your bank, and with loans there is interest charged once the loan is obtained.
Banks on the other hand obtain the loan from credit unions which basically is what the credit card providers such as Visa, Mastercard, and Discovery act as.
Since using a debit card is basically accessing your own money, the banks don’t feel the need to entice customers, credit cards on the other hand, can be very lucrative for the banks and they are eager to entice customers via a vast array of promotional offers.
These promotional offers range from a 0% APR (Annual Percentage Rate) for a fixed term (usually about a year to 15 months), voucher points for grocery shopping, and points for air miles which can get very competitve (if you’ve ever seen Up in The Air!)
For those who are worried about credit card charges, and getting into debt, a debit card is a good alternative, although debit card providers do not offer payment protection, as many of the credit card providers do.
Visit credit cards debt help, for credit cards debts and general debt consolidation advice from our debt experts.