You probably won’t be able to tell the difference between a credit and debit card just by looking at them. Both are made of thin pieces of plastic measuring 3⅛ inches by 2⅛ inches, feature embossed 16-digit numbers, and have a thin strip of black on the back.

But the differences are easy to see after you purchase something with them.

How debit cards work

Debit cards make payments with money you already have. When you swipe your debit card, money is deducted directly from your bank account to the store where you made your purchase.

Benefits of debit cards

Paying with debit can be very useful in paying bills and making purchases online. They can also make keeping track of your finances easier. Because debit cards work only with money that you already have, the risks of racking up debt are relatively low.

If you do make charges that exceed the amount of money you have available, most banks will cover the amount and charge what is called an “overdraft fee” in addition to what money the bank covered. The lousy rats.

How credit cards work

Unlike debit cards, credit cards use funds that come from a third party the credit card company, to pay for purchases. When you pay for an item with a credit card, you are essentially using someone else’s money that you promise to pay back later.

If you pay back the credit card company before the billing period ends, which is generally within 15 to 45 days, you don’t have to pay any interest. If you have to take longer than that time period to pay the credit card company back, you will be charged a percentage of your remaining balance every month.

Benefits of credit cards

The main benefit of credit cards is that they allow you to pay for items that you can’t afford on your own at the time or purchase. Many credit cards offer benefits for their users, such as airline miles or cash back incentives. Additionally, there are federal laws in place to protect credit card users against fraudulent charges – a benefit that debit cards don’t offer.

If you or someone you know is struggling with credit card debt, help is immediately available. Debt relief programs such as debt settlement, debt consolidation & debt consolidation loans, and consumer credit counseling can help you get your financial life back on track.