Debit Cards vs. Credit Cards
Here are two picture examples of debit and credit cards, both from the same
bank. Fill in the missing labels and circle any differences that you can see.
Debit Card
Bank name
and logo
Name of
account holder
Expiry Date
Credit Card
Chip
Card number
As you can see, debit cards and credit cards can look very, very similar to each
other, especially if they come from the same bank.
However, there are some important differences about the way each one works.
A debit card is linked directly to your bank account and
only uses money that is available from that account. This
means that if you pay for something, the money will come
straight out of your account.
For example, if you buy a pair of trainers that costs
£20, your account will be debited £20. If you do not
have £20 in your account, your card may be declined
and you will not be able to buy your trainers.
Debit cards use money you already have.
A credit card is not always linked to your bank account.
Any money that you spend using this card will be put onto
a bill that you must pay back later. This means that you
can pay for something without using the money straight
away.
For example, if you try to buy your pair of trainers with a credit card, even
though you do not have £20 in your account, you will still be able to buy your
trainers. This is because your bank is trusting you to pay them back.
Credit cards use money that you must pay back.
Using a credit card can have its benefits, but you must make sure you can pay
the money back. If not, you could find yourself in debt, which can stop you from
being able to borrow money in the future.
It is also important to read the rules when you get a credit card, as you will
usually have to pay interest on any money you use.
Using what you have learnt about debit and credit cards, can you complete the
table below with the pros and cons of each type of card.
Debit Cards
Advantages
Disadvantages
Credit Cards
Advantages
Disadvantages