Money Monday: What’s the Difference Between a Credit Card and a Debit Card?

They're both plastic. They're both tied to your name. They both help you buy stuff. Yes, credit cards and debit cards have a lot of similarities... but they are not the same thing.

The Differences Between a Debit Card + Credit Card

When you use a credit card, you're borrowing money to pay for the item you buy. It is not your money. You have to pay that money back, usually along with an additional fee called interest.

When you use a debit card, you're using your own money. When you swipe your debit card, the money is withdrawn directly from your account. So long as you have enough money in your account to pay for a purchase, you typically won't be charged any additional fees.

A credit card transaction usually requires a signature while a transaction made using your debit card requires you to enter your PIN. In most cases, you can run your debit card as a credit card. In doing this, money will still be drawn directly from your account, but you'll have to sign instead of entering your PIN, and the money might not be withdrawn from your account as quickly. In some cases, running your debit card as credit can help you to increase identity theft protection and avoid fees from your financial institution.

So, when is it better to use one card over the other?*

Use Your Debit Card

• If the other party needs to be paid immediately.
• When you've automated your finances and are on a budget.
• If you're keeping a close eye on your money or are recovering from poor money-management habits.
• If you want the best exchange rate on foreign currency.

Use Your Credit Card

• When shopping online.
• When making large purchases or electronic purchases.
• When you are traveling, or on vacation.

* For more information on when to use which card and why, check out this Lifehacker article.

Also keep in mind that, with the ease and quickness of swiping a card to make a purchase, it may seem like too much work to carry around a checkbook to track your spending. Utilize online and/or mobile access to keep up with your transactions and make sure they've gone through okay, that nothing suspicious is up, and to make transfers into and out of your accounts as needed.

Helpful Hint: You can update your 3Rivers Debit Card PIN number anytime, free of charge, by calling 1.866.839.7480.