What's the Difference Between a Debit Card and Credit Card?

POPSUGAR Photography | Mark Popovich
POPSUGAR Photography | Mark Popovich

Too embarrassed to ask? Don't be. If the difference between a debit card and credit card has never been explained to you before, it's understandable that you're a little confused. Once the distinctions are described to you, managing your money and accounts will be easier than ever. Let's break it down.

Debit Card: When you use a debit card, the money you spend is automatically taken out of your account. You must have enough money in your account for your purchases when you make them. It's important to keep track of the balance of the banking account linked to your debit card so that you don't face any declined purchases or overdraft fees.

Credit Card: This type of card allows you to buy things in the present and pay for them in the future. You will have to clear your balance at a later time. Often you receive a monthly statement with the minimum payment you will need to make for that time period. Think of a credit card as money available to you that you don't actually have — you will eventually pay for it like a bill.

So the bottom line is, a debit card is taking money out of your banking account while a credit card is charging your line of credit. There are lots of great benefits to both methods; it's all about using what's best for you. Now you know!