Credit Card or Debit Card?
In 2025, consumers used cash for only about 14% of all payment transactions. With more and more Americans utilizing credit and debit cards for payments – both in plastic form and through payment apps – it’s important to understand the difference between the two and which payment method is right for you. This defining article from our friends at Ohio Credit Union League spell it all out – quick and easy!
Credit Card vs. Debit Card: Does it Matter?
The difference between a credit and debit card has a bearing on your credit score, and to some degree on the safety of your funds in our current climate where fraud is the norm. Learn more below about credit and debit cards, and then contact FFCCU today to learn more about the variety of resources we have available to meet your financial needs.
Credit Cards
A credit card provides members with the flexibility to make a purchase now and pay for it later. Though we don’t really think of them this way – a credit card is a kind of loan – more specific a form of “revolving credit.” Credit cards allow individuals to make purchases up to a pre-established credit limit and then make one lump payment at the end of the credit card billing cycle (typically a month).
Credit cards often include rewards that allow you to benefit from your purchases, ranging from cashback to airline miles. FFCCU offers both a rewards style card, and our Great Rate VISA focused on balance transfers to help reduce debt from other, higher-interest rate cards.
Lastly, benefits can often offer more security than debit cards, since a person would not have direct access to your checking or savings account should they steal your credit card or card information.
What to Consider when Using a Credit Card
If you are unable to make the full payment on your credit card, you may incur interest charges on the remaining balance. Credit cards can sometimes also include annual fees, advance fees, and balance transfer fees. Active use of a credit card does contribute positively to your credit score. While closing a card out does harm your credit score, it also removes that card as a target for fraudsters who could potentially gain control and deal some serious damage.
Also, while it’s often more convenient to make purchases with a credit card, spending can add up quickly, leading to overspending and debt. It’s important to monitor spending to ensure it remains in line with your budget goals.
Debit Cards
Debit cards give you access to your money without worrying about having enough cash on hand to make a purchase. Because debit cards are directly connected to your personal checking or savings accounts, you do not need to worry about a waiting period or approval process.
Debit cards also rarely include interest charges or annual fees, so you can access your funds without additional costs associated with using your debit card. Lastly, debit cards help you track your spending in real time, which can help with maintaining your personal budget.
What to Consider when Using a Debit Card
A debit card will not help you build credit, and therefore won’t affect your credit score either positively or negatively. A good credit score can often be helpful when making large purchases like a car or a home. Debit cards often don’t include rewards and are sometimes subject to overdraft fees if you spend more than the amount you currently have in the account associated with the card. And while many debit cards offer fraud protection, they are also directly connected to your personal accounts, making it easier for criminals to access your funds.
Connect with FFCCU Today
To have all of your questions about credit cards and debit cards answered, contact FFCCU today. We’re happy to discuss the options available to you and how we can help you achieve your financial goals.
Posted In: Guest Blog, Lending, Lending, Saving
