What are debit cards and credit cards? –
What we're covering..
Introduction 👋
Debit cards? Credit cards? What does it all mean? What is the difference?
They’re very similar words, but very different services offered by banks.
Today we’re explaining what they are, and what the difference is.
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
Debit cards 💳💸
Debit cards are plastic cards that banks give you, to help you spend money from your own bank account.
When you open a current account (usually your main day-to-day bank account), you can be given a debit card to help you spend your money.
Credit cards 💳🏦
Credit cards are plastic cards that banks offer you, to help you borrow money to buy things.
When you use a credit card, you are borrowing money. Usually you have to repay this money regularly (every month) until the loan is paid off.
When you borrow money with a credit card, you could be asked to pay “interest“ (extra money) to say thank you for the loan.
What’s the difference? 🤷♀️
Similarities 👬
- Both credit and debit cards help you to pay for things
- You can get both debit cards and credit cards from banks
Differences ⚖️
The biggest difference between debit cards and credit cards is…
Debit cards = spend your money 💸
Credit cards = spend the bank’s money (you borrow it) 🏦
There are lots of other differences you should be aware of too, and we’ve highlighted some of them in the table below.
| Credit Card 🏦 | Debit Card 💸 |
| Borrowing money that needs to be repaid | Using money that is yours to pay |
| You may be charged “extra money” (interest) for taking out the loan | Banks often give debit cards for free |
| Credit cards can help spread the cost of payments | Often paying for things in one go |
| Sometimes costs more overall due to paying interest | Could cost less because you’re usually paying in full straight away |
| In the UK you might have more protection when buying things with a credit card. There is a law called the “Consumer Credit Act” – this law might be able to help you to claim back money if you buy something faulty or the company closes down. | You might have less protection in the UK when buying things with a debit card. If you buy something faulty or the company closes down you may not be able to claim back money. |
| Getting a credit card might help you build your credit score (a score that shows how good you are at paying back money). This could help you take out bigger loans in the future. | Getting a debit card might not impact your credit score. |
| Credit cards are a type of debt (borrowing money), that could lead to debt problems if not managed carefully. | Debit cards use your own money instead of borrowing it. |
| It might be tempting to overspend on a credit card because it’s not your money. | It might be easier to manage your spending with a debit card because it’s your money. |
If you’re in the UK and need help deciding whether to use a debit or credit card to buy things, you can use websites like Money Saving Expert to help you.
Money Saving Expert Articles:
You could also find a regulated financial advisor to help give you advice.
Conclusion 👍
So that’s it!
The biggest difference is that debit cards spend your money, and credit cards spend the bank’s money. They have lots of other differences that you should be aware of too!
Hopefully you’re feeling more confident about understanding debit cards and credit cards.
If you know any friends or family members who might benefit from learning about debit cards and credit cards, share this post with them!
Finally, don’t forget to check out our similar articles below!
Similar articles to “Debit cards vs credit cards – what’s the difference?” ⬇️
How to start looking after your money 🌱
8 reasons to start saving money now 🐷
Why you need to start thinking (and talking) about money💸
Is borrowing money a bad thing? 🤷♀️
How to keep control of your money 💸
🎓
Follow us!
for free daily Grown-Up lessons 🙌🎉
