What is the difference between a credit card and debit card?
Author: Chuck Ivens
Website: http://www.ChecksInfo.com
Added: Sun, Jan 14, 2007 14:11:32
Category: Checks Questions
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Credit and debit cards look very much alike but function differently. A credit card is used to purchase goods or services on credit. The bank or institution that issues the credit card sets a credit limit and bills the cardholder for monthly payments whenever there is an outstanding balance. Typically the use of a credit card requires the cardholder's signature when purchases are made in person.
A debit card, on the other hand, works like an electronic check. The payment for purchased goods or services is immediately deducted from the cardholder's checking or savings account. Typically the use of a debit card also requires a PIN number.
A debit card can also function as a credit card as far as the seller is concerned if you have made appropriate credit arrangements with your issuing financial institution. When it is used as a credit card, no PIN number is required but the funds are still deducted directly from the cardholder's account.
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Chuck Ivens answers frequently asked checks questions at PrettyGreatAnswers.com.
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