Credit Card vs. Debit Card: Similarities and Differences Explained

There are huge differences between swiping a debit card and swiping a credit card. And these differences go far beyond whether or not you’re racking up credit card debt.

Debit and credit cards give you different protection against fraudulent purchases, separate types of rewards, and have different effects on your ability to borrow money in the future. Here’s what to consider before you decide which type of plastic to pull out of your wallet.

What Is a Debit Card?

When you make a purchase with a debit card, the money will be drawn from an account where you already have money saved. Generally, debit cards are linked to checking accounts, but you can also get a debit card linked to your savings account or a prepaid card balance.

Debit Card Linked to Your Bank Account

Your bank will likely issue you a debit card linked to your checking account for free. Sometimes, you can get a free debit card for your savings account, too, though you may have to pay a small card issuance fee.

Debit Card Linked to Your Checking Account

When you are using a debit card linked to your checking account, the money will automatically be deducted from your account balance. Depending on the retailer and your bank, this ‘automatic’ transaction might not be immediate – it could take a couple days to reflect on your online statement.

Debit Card Linked to Your Savings Account

When your debit card is linked to your savings account, your bank may place restrictions on how many withdrawals (or transfers) you can make every month. Until April 24, 2020, there was a federal rule called Regulation D that required banks to set this limit at six withdrawals or transactions per month.

But Regulation D is no longer in effect. Just because the federal government has removed the regulation doesn’t mean every single bank has followed suit. Your bank may impose fees if you make more than a set amount of outbound transactions per month – it’s usually six as a matter of…

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