Debit Cards vs. Credit Cards: Similarities and Differences


Credit cards are very popular among shopaholics. The convenience of swiping and doing cashless transactions make credit cards the best companion in shopping. However, an alternative to credit cards are debit cards.

So what’s the difference and similarities between a credit card and a debit card? Both cards are used by cardholders to buy good and services without using cash itself. In addition, both cards can be used to make purchases at the point of sale, over the phone, through mail order, and on the internet.

A credit card uses a line of credit granted by a bank or a credit card company which in turn advances the payment to the merchant. In this case, the credit card holder becomes a borrower of the bank. When you exceeded your credit limit, you can no longer use your credit cards for purchases.

On the other hand, a debit card is linked to the card holder’s bank account. Therefore, the funds used in paying goods and services are automatically withdrawn from the user’s bank account. When you already consumed the funds linked to your debit cards, you can no longer use your debit cards.

Another way to put it, when making purchases, credit cards allow you to pay later while debit cards allow you to pay now but in in a cashless, secure, and convenient way, electronically.


Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

14 responses on “Debit Cards vs. Credit Cards: Similarities and Differences

  1. Credit cards doesn’t use a line of credit, i guessed you mean “credit limit”, ‘coz line of credit is different to what you are talking about.

    • It’s really a line of credit or credit line that has a maximum limit indicated by the credit limit.

      According to Wikipedia: “A line of credit is any credit source extended to a government, business or individual by a bank or other financial institution. “

    • Most lines of credits are secured loans tied to some form of collateral, while most credit cards are unsecured debts. Often a line of credit is a larger loan tied to a home as a second mortgage. It is used to finance large purchases and to allow the borrower to write off the interest expense on his taxes. A credit card typically has a lower limit and is used for smaller purchases.

  2. Here’s the difference:

    A credit limit is the maximum amount a customer can have regardless of whether the account is current or not. Once the limit has been reached, no more may be obtained until the balance has been brought below the limit.

    A credit line / line of credit is the maximum a customer may have without specific authorization. Once the line has been attained, further orders may be released, but it requires authorization.

  3. Another difference.

    Lines of credit may have paper checks with which to access funds, in contrast to plastic credit cards, which have magnetic strips that are scanned for purchases.

  4. I think credit limit and line of credit is all just the same. The merchant sells their merchandise ON CREDIT — as opposed to cash sales. 😀

  5. hey sir tyrone, do you have a post on what points to consider in planning to franchise? I am planning to franchise a coffee vending machine, I just want to be sure that the ROI will be possible.

  6. Eto pa ang ilang difference:

    1. mahirap makakuha ng credit at madali naman makakuha ng credit card.
    2. kapag may credit card ka ay matutukso ka palagi na bumili everytime na makakita ka ng swipe here, kung sa case naman ng debit ay matatakot kang gamitin since nakikita mo kung makano lang ang pera mo.

  7. Ang malaking kaibahan sa debit card at sa credit card:
    Ang debit card ay pera mo na ang gagastusin mo, samantalang sa credit card naman ‘yong gagastusin mo ay utang mo… =)

Leave a Reply

Your email address will not be published. Required fields are marked *

fourteen − one =