Whenever you prepare to make a purchase, you face a decision: debit or credit? They may look alike, but in some cases, credit is the best choice, while in others debit is the more appropriate option. You may find yourself wondering about the difference between these cards, and how do you know when to use credit and when to use debit?
Credit card transactions are processed by a card issuing company. They allow you to borrow a limited amount from a card provider to make purchases, typically involving a transaction fee. Money may or may not be deducted from your bank account immediately, depending on the retailer. One notable benefit of credit cards is that they offer more anti-fraud protection than debit cards. As long as you report the theft or fraud promptly, card users only have up to $50 in liability. Some credit card transactions may require a signature.
When you complete a transaction with a debit card, you are allowed to spend money that you have already deposited in an account with your card provider. Debit cards, like Bank of the James’ Visa debit card, are convenient, safe, and smart, and easier than writing a check or handling cash. Money is immediately deducted from your bank account. If there are insufficient funds in your account, your bank may either decline the transaction or charge you an overdraft fee. Debit cards are the most similar to using cash without actually having bills in your wallet. Sometimes debit card transactions require use of a PIN, and you can use debit cards to get cash from ATMs.