Pros and Cons of Credit and Debit Cards

According to a 2015 Chime report, nearly 70% of millennials prefer debit cards to credit cards , and Transunion says they have fewer bank-issued and private label cards than older generations.

Understandably, they can be wary: Credit card debt is a serious problem in the US, and it’s hard to get out of it if you fall into it. The lending industry is incredibly opaque and predatory. But a credit card is also an essential tool that, if used responsibly, can help improve your financial situation throughout your life.

Here are a few things to keep in mind about the difference between a debit card and a credit card.

Debit cards


  • Money is charged automatically, so day-to-day expenses can be more transparent.
  • You can set up automatic transfers to your savings account.
  • You can withdraw cash from an ATM or another merchant.
  • Expenses do not affect your credit score.


  • It is less secure than a credit card, especially for online purchases. Issuers return fraudulent credit purchases much faster than debit purchases.
  • If your card is stolen and you need “more than 2 business days after you learned about the loss or theft, but less than 60 calendar days after the statement was sent to you”, then you may be liable for up to $ 500 for fraudulent payments to report the theft …
  • You can get an overdraft and pay the corresponding commission (on average $ 33.38 per bank rate).
  • Spending cannot improve your credit score.

Credit cards


  • Points, rewards, and refunds add value to the money you are already spending, and all of them – travel, refunds, and more – allow you to prioritize what matters to you.
  • More secure than a debit card, especially for online purchases. The maximum you have to pay is $ 50 after you file a theft thanks to the Fair Credit Billing Act (FCBA) , and some companies will opt out of this.
  • It’s easier to get a refund if your card is stolen.
  • Can be used to build up your credit score to help with borrowing – your payment history is the most important component of your FICO score (it is 35%), but the length of your credit history (that is, how long you have had the card) also counts. This can save you thousands of dollars in lower interest rates when dealing with your home or car for a lifetime.


  • It’s easy to get into debt if you overspend: The average household with credit card debt has a balance of $ 16,883 , according to NerdWallet.
  • It is difficult to compare and contrast each type of card and how they can help (or harm) you.
  • It can hurt your credit score if you’re not careful with your spending.
  • Many people are not aware of how to increase their account, pay off their debt, or even what their interest rate is or how it works.


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