Credit Cards vs. Debit Cards

Although credit cards and debit cards may look alike, their features are very different. The most notable difference is the added protection built into credit cards that is not available when using a debit card, which has a direct link to your checking account. We have compiled a list of features to consider when using a debit card or credit card:

Debit Cards:

  • Money is taken directly from your checking account.
  • Alternative to cash
  • Rewards points may be available for gift items, travel, etc.
  • If you are unhappy with a purchase, there is no guarantee you will get your money back if you paid using a debit card. Federal law does not protect disputed charges on a debit card.
  • Fraudulent withdrawals on a debit card can result in bounced checks and no access to cash while the bank investigates the fraud report.

Credit Cards:

  • Purchases are charged to a line of credit and you are billed later. However, if balances are not paid in full each month, you will pay high interest rates on your purchases.
  • Build credit by paying bills on time.
  • Rewards programs offered on most cards. However, some cards also charge annual fees.
  • If you aren’t happy with a purchase, the card issuer can withhold payment from the retailer until they resolve your dispute. Federal law protects disputed charges on a credit card.
  • Fraudulent charges on your credit card can be removed quickly by calling the issuer and reporting the charges as fraudulent.

At FineMark, we encourage our clients to use a credit card over a debit card. Credit cards offer more protection because funds are not withdrawn directly from your checking account, as with a debit card. If you notice fraudulent activity on your credit card, those charges can be contested before making a payment, so your checking account is never disrupted. If you have any questions about this article, feel free to give us a call or stop by our office. We’re always happy to help.