Credit Cards vs Debit Cards - The Truth in 10 Simple Steps

CREDIT CARDS E DEBIT CAROS Vs. THE TRUTH IN 10 SIMPLE STEPS CREDIT CARDS DEBIT CARDS Interest O The interest charges increase if you only make the minimum payment. O Interest charges are not assessed given that customers use their own funds. Line of Credit O Carries a line of credit, allowing borrowers to draw on the line multiple times. O A line of credit facility is not offered. Credit History 1 2 3. 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 (10 O Cannot build credit by making payments. O Timely payments and responsible use help cardholders to build or rebuild credit. Credit card activity and payments are reported to the major bureaus. Source of Funds O Banks, credit unions, and other financial establishments offer credit cards. Borrowers spend money deposited by other customers. O Customers deposit cash into their bank accounts, They spend their own money. Legal Liability • O Strict There is a liability limit of $50 in case of fraud and provided that the cardholder notifies the issuer within a period of 60 days since the fraud occurred. O Lean. Customers must notify their financial institution within 2 days. The liability limit is the same as for credit cards ($50). Monthly Bills O Monthly bills are sent regularly to customers once a month. O There are no monthly bills associated with debit cards Limit Ш O Issuers can lower or increase the credit limit or make other changes. O The limit is equal to the amount deposited. Ouerdraft Fees O High. Overdrafts may be allowed. O Low fees. While overdrafts are sometimes allowed, credit card issuers charge fees. Linked With %24 II O There is no requirement to link the card to a bank account. O Linked to savings or checking account Fraud O Holders are responsible for any bounced checks, and they may be held liable in case of loss. Protect yourself against fraudulent activity. O You should prove unauthorized access to your account. Brought to you by CreditCardFAQ.ca Sources: diffen.com; money.cnn.com