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The Difference Between Debit and Credit Cards

The Differences Between Debit And Credit

There are infinite and convenient ways to spend money and make payments in the 21st century. With cash, credit cards, debit cards and ATM cards, making a purchase is fast and easy. Since most people carry both credit and debit cards in their wallet, it is important to understand the pros and cons of both. It is a personal decision on which option to choose because it will be based on an individual’s particular financial situation. Here is a rundown:

Advantages of a Debit Card

  • Anyone can have a debit card. One must have a checking account in order to obtain a debit card.
  • Most debit cards have low or no fees.
  • Protect yourself from yourself. Debit cards can protect you from going into debt. You are limited to spending the amount of money you have in your checking account.
  • You will not get robbed of your cash if you are carrying only a debit card.
  • It is so convenient. Purchases can be made using a merchant’s point of sale terminal rather than the slow process of writing out a paper check or picking out exact change down to the penny.
  • If a card is lost, stolen or fraudulently used, Visa and MasterCard’s zero liability policy guarantees you will not be held responsible for unauthorized charges made with your card information.
  • They are universally accepted and can be used practically anywhere worldwide.

Advantages of a Credit Card

  • Credit cards can save you time and trouble — no searching for an ATM or keeping cash on-hand.
  • They are good for record keeping. Credit card statements can assist you in tracking your expenses. Some cards even provide year-end summaries that really helps at tax time.
  • They are universally accepted and can be used almost anywhere worldwide.
  • Cash advances at ATMs or bank branches are quick and convenient, putting money in your hands when you need it.
  • Controlled use of a credit card can help you establish credit for the first time or rebuild credit if you had problems in the past—as long as you stay within your means and pay your bills on time.
  • Many credit cards offer various perks, such as cash back, free airline miles or discounts and merchandise.
  • Credit cards are great for making hotel room, car rental or airline tickets reservations.
  • If a card is lost, stolen or fraudulently used, Visa and MasterCard’s zero liability policy guarantees that you won’t be held responsible for unauthorized charges made with your card account information.
  • Many credit cards, such as the Hawaii State FCU Visa card, offer additional protection for extended warranty, travel benefits, roadside assistance and return protection.

Disadvantages of a Debit Card

  • Debit cards normally do not offer rewards programs.
  • Using a debit card for ATM transactions may be costly if the ATM does not belong to your financial institution.
  • In the event of a disputed debit card transaction on your account, the financial institution has 10 business days to research the dispute before providing you with a credit. Your account balance is affected from the moment the fraudulent transaction takes place. Fraudulent charges can tie up funds so that legitimate charges are declined or cause overdrafts.
  • There is no grace period like there is with a credit card. Funds are withdrawn immediately from your checking account.
  • With a debit card, you do not impact your credit score at all, which means that you cannot build it up.

Disadvantages of a Credit Card

  • They may encourage people to spend money they do not have.
  • You may not be able to use them at smaller stores. Merchants can set up a minimum transaction amount up to $10.
  • Purchases can become more expensive if you carry a balance or miss a payment. Interest and penalty fees can be high on some credit cards.
  • Credit cards can carry large fees: annual fees, balance transfer fees, cash-advance fees, foreign transaction fees, late payment fees and over-the-limit fees.

Choose the best method that helps you manage your money. It pays to research in order to get the best interest rate and terms on your debit and credit cards. Click here to learn more about the great features and benefits exclusive to Hawaii State FCU members.

Want a little more help?  Check out our eLearning module on CHECKING ACCOUNT and CREDIT CARDS.

About HSFCU Marketing

Hawaii State FCU firmly believes that financial education empowers people to make smarter decisions throughout their lives, resulting in a better financial future. We do this by providing useful financial tools such as educational blogs, online courses and free webinars on a variety of topics including planning for retirement, debt management and buying a home. For more information on these and other resources, including free financial calculators and budget-friendly recipes, visit and click on “Financial Health.”

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