A debit card is a plastic card linked to your bank account. It allows you to purchase items from merchants that also accept credit cards. The big difference of debit vs. credit cards is that money in your bank account is sent directly to the merchant. With credit cards, a credit card company is sending the cash to the merchant and increasing the balance on your credit account.
Here are a few other differences between debit and credit cards, including:
- In order to immediately take money from the bank account, debit cards require that a four-digit Personal Identification Number (PIN) is entered. If instead the debit card user signs and doesn’t enter the PIN, the transaction is like a credit card and does not take money from the bank account.
- When you use a debit card with a PIN the transaction is sent over a different network from a credit card, which is why you get asked “credit or debit?”
Some people choose to make purchases on debit cards (with their PIN) instead of credit cards as a technique to control spending and minimize debt.
You can think of debit cards as Bootstrapping and credit cards as Debt.