Debit Cards vs. Credit Cards – What’s the Difference?
Merchants usually ask, “Debit or credit,” when you hand them your debit card to pay for a purchase. Did you know that, although debit cards and credit cards look alike, they function very differently? This blog will explain those important differences.
1. Debit Cards: PIN vs. Signature
You have a choice of how you use your debit card when you swipe it. If you choose debit, you’ll need to input your Personal Identification Number (PIN). Choose credit and you’ll need to sign the receipt. Some merchants prefer you to use debit instead of credit to avoid paying credit card processing fees. While debit card transactions are usually posted immediately, some stores process their credit cards at the end of the day. Because of this, you should always keep a running tally of your balance. To learn more about those differences, check out this Wise Geek article.
2. Checking Account vs. Line of Credit
When you swipe your debit card, the money comes directly out of your checking account. You can only spend what’s available in your checking account at that time, unless you have opted-in to debit card overdraft services for consumer accounts, as discussed here. Unlike a credit card, your debit card lets you make interest-free purchases and withdrawals directly from your checking account.
If you use a credit card, charges are billed to you at a later date to your line of credit, and interest charges may apply if you don’t pay off the entire balance by the due date.
3. Both Have Limits
Your debit card is subject to a daily purchase limit put in place by your bank to help prevent fraud. These limits are always disclosed to you in writing upon receiving your card. Make sure you know your limit to avoid being declined for purchases that exceed your daily limit. If you are making a big purchase, you may be able to call your bank before and request approval for a temporarily increase. Here’s information on the limits for our customers.
With a credit card, you have a credit limit, which is based upon many factors including your credit score and income. This is the amount of credit that you are allowed to draw upon. According to MSN Money, experts advise not maxing out your credit card to the available limit and suggest using only 30% or less of your credit limit so you don’t hurt your credit score.
Webster’s Debit Cards & Credit Cards
To learn more about Webster Bank’s VISA debit card & our new UConn Huskies debit card, click here. If you’re an existing Webster customer and want to get the new UConn Huskies debit card, click here. We also have just introduced our new UCONN® credit card, which you can learn more about here.* With a Webster Bank credit card you will receive fraud protection, 24-hour card member service, price protection and more. Let us know any questions about debit or credit cards in the comments below.
*The creditor, issuer and service provider of your Webster Bank credit Card is Élan Financial Services, pursuant to a license from Visa U.S.A. Inc.