Young Americans Blog

Concept of the Month: Debit vs. Credit

2015_Bank_Concept_DebitThis month we’re discussing the concept of credit versus debit.  At Young Americans Bank, you can apply for either card — or both — but it’s important to know the difference and how each can be used.

Debit

  • Debit cards are swiped like credit cards, but the money comes directly out of your checking account.
  • Because this money comes directly out of your checking account, it is very important to keep track of how much money you’re spending so you don’t overdraw your account.
  • It’s a good idea to keep track of your debit card spending in your check book register, because that is where the money comes from and it will help reduce the risk of overspending.

Credit

  • When using a credit card, you’re borrowing money from the credit card company. The company pays for the item you purchased, and you pay the credit card company back at the end of the month.
  • If you spend more of the borrowed money than you can afford to pay back, the credit card company will allow you to pay part of the bill that month, and pay the rest the next month. They will charge you interest on the remaining money owed, and interest adds up fast.
  • A good rule to follow when using credit cards is not to spend more than you can afford to pay back. That way you won’t owe the companies interest and you will build good credit at the same time.

Learn more about some responsibilities you’ll take on with a credit card by checking out this worksheet.  Then come into Young Americans Bank for more information and applications for both cards.

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