What is the main difference between a debit and a credit card?

The main difference between a debit and a credit card lies in how funds are accessed when a transaction is made. A debit card withdraws money directly from a checking account at the time of purchase. This means that the available balance in the account is reduced as soon as the transaction is completed, providing a clear link between spending and available funds.

In contrast, credit cards allow users to borrow money from a credit limit established by the credit card issuer. Users must repay this amount, often with interest, if not paid in full by the due date. This reliance on borrowed funds is a key distinction between the two types of cards.

Understanding this difference is essential for managing personal finances effectively, as using a debit card requires careful budgeting to ensure that you do not overspend, while credit cards can lead to deeper debt if not managed carefully.