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Debit and Credit Cards

Debit and credit cards both serve as a means to transact business without exchanging cash directly.  This "electronic cash" is efficient, convenient and relatively safe.

 

The main difference between a credit and a debit card (or check card) is in the way funds are handled at the bank. 

 

A debit card requires funds available in the associated checking account and draws funds directly for each transaction.  Transactions cannot exceed funds available.  Essentially a debit or check card is an electronic extension to the checking account.

 

A credit cards credit debt.  Each transactions is applied to the outstanding balance owed.  Payments are made to reduce some are all of this debt each month.