Card Choices: Debit or Credit

October 18, 2021

What’s the difference between debit cards and credit cards?

Are you deciding between debit and credit cards? What are the advantages of each card? We’ll help you choose whether a debit card or credit card is best for you, or if getting both is the way to go.

Debit Card Advantages

Convenience- Easier to tote around than a wad of cash or a checkbook, a debit card takes money directly from your checking account when used.

Versatility- Most debit cards can be used to make purchases online or right at the store, or as an ATM card for withdrawing cash.

Maintain spending limits- When your checking account is empty, unless you’ve set up one of your financial institution’s overdraft protection options (see the tip below), you can’t spend any more.

Tip: Most financial institutions have options for what would happen if your checking account is overdrawn. Some of these options may incur a fee, so be sure to pick the one that’s right for you.

Credit Card Advantages

Convenience- A credit card lets you make purchases that you pay for later, but only up to the credit limit specified. It also lets you have access to money in an emergency.

Perks and points- Many credit cards offer choices like low rates or points, as well as perks such as extended warranties on purchases and protection when a store won’t accept a return.

Build credit- Paying the credit card bill in full and on time every month (and the same for any loan payments) reflects favorably on your credit score. This can mean better rates in the future on mortgages, car loans and more.

Tip: With credit cards, it can be easy to charge more than you should. Carrying a balance on the card will most likely incur interest charges and could negatively affect your credit score. Make sure you only charge what you can afford to pay off each month. And consider setting a manageable credit limit on the card.

Which Summit debit or credit card is best for you?

Take our debit and credit card quiz.

This content was first published on The Summit Blog in September, 2019.

Cynthia Kolko, The Summit Federal Credit Union