What's the Difference Between Credit Cards and Debit Cards?

I recently read "Ahhhhh I did something so freakin' stupid!" over at Budgets Are Sexy, in which J. Money discusses how he accidentally used his credit card over his debit card. I have to say I have not done this myself, but I do think it's a situation that is pretty easy to avoid if you know the difference between the two.

Here are the main difference between debit and credit cards:

Looks can be deceiving. First of all, debit cards may look like credit cards, but they are not credit cards. A debit card can have the same logo as a credit card and most places like retailers or gas stations will let you use it like a credit card, but again it's not.

Not all cards are created equal. When using a debit card, the money comes directly from your checking account. A credit card requires you to pay back the credit card company with interest if you don't pay back the balance in full each month.

Danger Will Robinson! When using plastic, you lose the emotion of spending. When making purchases it is always best to use cash. It hurts when you spend cash.

I am lost, do you know where I am? If you ever lose your debit card be sure to report it immediately.Time is of the essence with this. If you report any loss within two business days you aren't responsible for more than $50 if anyone uses your debit card.

Get lost, will you? If you lose your credit card however, report it immediately as well. The credit card company will issue a new card with most likely a new account number. If you are in debt on the other hand, it may be better for you not to get a new card and be tempted to charge on it again. Keep it lost.

(photo via legacyofdebtfreedom.com)

[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]

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