What is the difference between a credit card and a debit card?

The main difference between a credit card and a debit card is that a credit card is a type of loan, while a debit card is linked to the balance of a bank account. A credit card is a type of loan since the credit card company lends you a certain amount of money that you can use to purchase goods and services. You are then expected to pay back the loaned amount plus interest. Depending on the type of card and the agreement you have with the issuer, you may have a limit on how much you are allowed to borrow. In contrast, a debit card is linked to your bank account, not a loan. When you purchase goods or services with a debit card, the money comes directly out of your bank account. Debit cards are not managed by a credit card company, so there is typically no interest on any purchases made with your debit card. In North Dakota, both credit and debit cards are subject to the same federal laws for consumer protection, such as the Truth in Lending Act and the Fair Credit Billing Act. As a consumer, it is important to understand the difference between a credit card and a debit card, so you know how much you can spend and what kind of protection you have when using them.

Related FAQs

What are the late payment fees for credit cards?
What is the most important information to know about a credit card?
How do credit card companies make money?
What is the difference between a credit card and a debit card?
What is a minimum payment on a credit card?
What is Credit Card Act of 2009?
What is a balance transfer fee?
What is a variable rate credit card?
What is a credit limit?
What is a balance transfer APR?

What is the difference between a credit card and a debit card?

Related FAQs

Related Blog Posts