Credit And Debit Cards; what’s The Difference?

Many people don’t see the difference between a credit card and a debit card. Because they believe both cards provide almost the same financial output for them; let them buy things. If you wish to manage your finances smartly, it is imperative to learn the difference between these two. 

Credit Card 

With the credit card, a financial institution like a bank allows the user to borrow money from them on a short-term basis. Stillwater bank and trust is one such institution. Later, the user has to return the money with interest (differs from one card to another and based on plans). The primary benefit of credit cards is that you can borrow more money than what you have in the account. When a user withdraws cash from the credit card, he is taking debt from that financial institution. Yes, users can withdraw money from credit cards, just like a debit card. However, the interest rate, the limit, and other features vary from one card to another. There are various types of credit cards, and each bank has its exclusive list of credit cards with varying privileges. 

Here are some of the common types of credit cards. 

● Standard cards 

● Secured credit cards 

● Rewards cards 

● Charge cards 

With a standard credit card, the bank offers an extended line of credit to its user. Generally, for such credit cards, the user doesn’t have to keep any money in the account as collateral. Stillwater loans are a better alternative if you are in such a money requirement. However, it changes with secured credit cards. For such credit cards, the user must deposit a certain amount of money in the bank account as collateral. Rewards cards are known for providing multiple benefits to the user, like cashback offers & travel points. The charge card comes with no spending limit. However, the user has to return the borrowed money within a specified period. 

Debit Card 

Debit cards are similar to the credit card, but the user can withdraw/spend his money. With debit card usage, the user doesn’t take any debt, because the user will spend his money, which he deposited in the bank, earlier. 

Generally, there are three types of debit cards. 

● Standard debit cards 

● Prepaid debit cards 

The standard debit cards generally used to withdraw money from the bank. Whereas, the prepaid debit cards limit the user access money up to a specific limit/money, added to the card. Are you looking for more information about debit cards? Visit Minnesota bank and trust to learn more. 

Benefit & Drawback of Credit and Debit Cards 

Both cards have some positive and negative aspects. A credit card user can dispute unauthorized spending and get a refund for the purchase. However, with the debit card, the user doesn’t get any such benefits. A credit card is also handy when you are running low on money. You get easy access with a loan against the credit card, and repayment can increase the credit score of the user. Many companies also offer various cashback and reward points against the card. 

However, if a user has an uncontrollable urge for spending, then it is advised to put some restrictions on the credit card spending limit or choose debit cards. If you are looking for a reliable bank to receive credit and debit cards with no hidden charges and consequences, visit Bank Stillwater.