What’s the Difference Between a Debit Card and a Credit Card?

Banking Basics

What’s the Difference Between a Debit Card and a Credit Card?

What’s the Difference Between a Debit Card and a Credit Card?

Learn the differences between a debit card and a credit card.

When you arrive in the United States, one of the first things you need to manage your finances is a bank card. However, it can be confusing to decide between a debit card and a credit card, especially if you’re not familiar with how they work. This article will explain the key differences between both options so you can make an informed decision.

What Is a Debit Card?

A debit card is directly linked to your bank account. Every time you use it to pay or withdraw money, the funds are immediately deducted from your balance. It’s an excellent option if you want to manage your expenses in a controlled way and avoid debt.

Advantages of a Debit Card:

  • You don’t accumulate debt: You can only spend what you have in your account.

  • It’s easy to use and accepted at most merchants.

  • You can use it to withdraw cash from ATMs.

Disadvantages:

  • If you don’t have enough money in your account, the transaction will be declined.

  • It doesn’t help you build your credit history.

What Is a Credit Card?

A credit card allows you to borrow money from a bank or financial institution to make purchases, with the commitment to pay it back later. This means you can spend more than you have at the moment, but you need to be cautious to avoid excessive debt.

Advantages of a Credit Card:

  • It helps build your credit history, which is important for obtaining loans or renting a home in the future.

  • It offers additional protections, such as insurance for purchases or travel.

  • Some cards offer rewards like points, miles, or cash back.

Disadvantages:

  • If you don’t pay the full balance each month, you could face high interest rates.

  • It’s easy to fall into debt if you don’t control your spending.

Which Should You Choose?

  • If you’re starting your financial life in the United States and prefer to avoid debt, a debit card might be the best option for you.

  • If you need to build your credit history, a credit card is essential, but you must use it responsibly.

MAJORITY: An Accessible Solution for Immigrants

If you don’t have a Social Security Number (SSN), it can be difficult to open a bank account or access a card. Fortunately, MAJORITY offers a debit card that doesn’t require an SSN. With MAJORITY, you can manage your finances safely and easily while adapting to life in the United States.

Start today with MAJORITY and simplify your financial experience!

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