Eli5 can someone explain debit and credit cards and why and when to use one or the other
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A Debit Card is tied directly to a bank account. When you make a payment with it, the money comes directly out of your bank account. If you don’t have enough money in the account, you might run into a negative balance (below $0) and be hit with fees. So, you have to watch your bank account balance, but as long as you’re keeping above a minimum amount you won’t have to worry too much about it. The big “advantage” of debit cards is that there’s no interest because you’re directly spending your own money.
A Credit Card is like an open loan. When you make a payment with it, the credit card company pays it and the money goes on your balance. If you pay the balance off in full then that’s it. If you don’t pay the balance off in full then interest grows and you end up owing more than you originally spent. And if you don’t pay the *minimum payment* then you can hurt your credit score. Oh, and having credit cards affects your credit scores (use them right and the score goes up, use them wrong and the score goes down). A big advantage to credit cards is they offer better protection against fraudulent activity. Also, many of them offer points that you can redeem for travel or gift cards or cash back. So you get rewarded for purchases you would have made otherwise. The big *disadvantage* to credit cards is that if you are not mindful and controlling of your own spending, you end up in debt and you end up spending more money on things than they should cost.
I pay my credit cards off 100% every week or two and can’t even remember the last time I used my debit card. Edit: I meant I haven’t used my debit card to make a purchase in a hella long time. As u/Vikkunen says, absolutely use it for withdrawing cash from an ATM (never use a credit card for this).
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