Scribd Logo
Upload

Welcome to Scribd!

  • 16 views

    Order 475727 - Debit Vs Credit Card

    Uploaded by

    Dan Ngugi
    This document compares debit cards and credit cards. It outlines several similarities between the two types of cards, including that they both use verification codes to prevent fraud, offer rewards programs for purchases, and provide fraud protection for users. The major differences are that debit cards require a linked bank account while credit cards do not, debit cards do not charge interest while credit cards do, and credit cards have spending limits based on credit ratings while debit card limits depend on account balances. In conclusion, debit cards are better if you have money in your bank account while credit cards may be preferable if you have good credit but no bank account.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Order 475727 - Debit Vs Credit Card

    Uploaded by

    Dan Ngugi
    16 views4 pages
    This document compares debit cards and credit cards. It outlines several similarities between the two types of cards, including that they both use verification codes to prevent fraud, offer rewards programs for purchases, and provide fraud protection for users. The major differences are that debit cards require a linked bank account while credit cards do not, debit cards do not charge interest while credit cards do, and credit cards have spending limits based on credit ratings while debit card limits depend on account balances. In conclusion, debit cards are better if you have money in your bank account while credit cards may be preferable if you have good credit but no bank account.

    Original Title

    Order 475727_Debit vs Credit Card

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document compares debit cards and credit cards. It outlines several similarities between the two types of cards, including that they both use verification codes to prevent fraud, offer rewards programs for purchases, and provide fraud protection for users. The major differences are that debit cards require a linked bank account while credit cards do not, debit cards do not charge interest while credit cards do, and credit cards have spending limits based on credit ratings while debit card limits depend on account balances. In conclusion, debit cards are better if you have money in your bank account while credit cards may be preferable if you have good credit but no bank account.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    16 views4 pages

    Order 475727 - Debit Vs Credit Card

    Uploaded by

    Dan Ngugi
    This document compares debit cards and credit cards. It outlines several similarities between the two types of cards, including that they both use verification codes to prevent fraud, offer rewards programs for purchases, and provide fraud protection for users. The major differences are that debit cards require a linked bank account while credit cards do not, debit cards do not charge interest while credit cards do, and credit cards have spending limits based on credit ratings while debit card limits depend on account balances. In conclusion, debit cards are better if you have money in your bank account while credit cards may be preferable if you have good credit but no bank account.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 4

    Student’s Last Name 1

    Student’s Name

    Professor’s Name

    Subject

    DD Month YYYY

    DEBIT CARD VS. CREDIT CARD

    For the last ten years, people around the globe have heavily relied on debit or credit card

    to conduct transactions. Compared to the past where people used to get their checks on Friday

    and quickly rush to banks during lunch breaks to deposit and withdraw cash for shopping and

    paying bills. Now, it has become rare to find an individual setting foot inside a bank to directly

    deposit or withdraw funds to use. Moreover, many employers globally don’t issue paper checks

    to their employees. Bills tend to be also paid online as many people have embraced electronic

    systems of payment. In a discussion by Zinman, he states that people have embraced cashless

    methods of payment compared to traditional methods of cold cash, and this has been enabled by

    the existence of debit and credit cards. With this in mind, this paper will seek to show the

    similarities and differences between debit and credit cards.

    Similarities

    To verify one's card identity both debit and credit cards have a three or four-digit card

    verification code. With recent advancements in technology, the fraudulent purchase has been on

    the rise. Therefore, the digit code found at the cards plays a crucial role in that they prevent

    thieves from stealing when purchases are made on the internet.


    Student’s Last Name 2

    Both cards have a reward program. This is seen when they provide points and cash-back

    incentives when one makes purchases through the cards. Points accrue when one makes

    everyday purchases (Ching), for example, garments, food, and gas, as well as travel costs. But,

    it’s important to reach out to your financial institution to enquire on rate structure, restrictions

    and program details as they vary from one institution to another.

    Both debit and credit cards have purchasing and accounting fees. As for debit cards, they

    tend to charge fewer fees on purchases and interest rates, but small fees may be incurred. Debit

    cards also charge fees on purchases that surpass the accessible balance and charge to withdraw

    cash in an automated teller machine (ATM). On the other hand, credit cards charge a certain fee

    of transferring the balance to another credit card, charges to obtain money in advance, charges

    for paying late bills and fees for exceeding credit limits. Other credit cards charge annual fees for

    the sake of keeping them open (Shy).

    Fraud protection is another character found in debit and credit cards. Under the Credit

    Billing Act, credit card holders are at risk up to $50 for fraudulent purchases, in any case, the

    cardholder must inform the bank issuer when the card is stolen or lost. Hence, if one doesn’t

    provide notification within 30 days, he/she will be held responsible for the charges. Debit cards

    also have fraud protection. The federal Electronic Transfer Act states that one is liable for debit

    cards up to $50 on the off chance that you tell the bank inside two business days in the wake of

    understanding that your card is lost. However, one may be liable to $500 if you fail to notify the

    banks that your card is missing (Zinman). Zero liability is offered in cases of theft or loss

    provided you notified your banks immediately.

    Differences
    Student’s Last Name 3

    The major difference between credit and debit cards is on requirements. For credit cards,

    one is mandated to have a bank account, but for debit cards, one is mandated to have a bank

    account (Zinman). Besides that when withdrawing money, in the case of a debit card it’s done

    from the bank account linked to the card, while in credit cards the money isn’t withdrawn from

    the account.

    Charges also tend to differ in both cards. For instance, in a credit card, the banks tend to

    charge interest, whereas in debit cards no interest is charged. Besides, there is a high-interest rate

    on credit card which arises from the annual interest of keeping accounts active, transfer of

    money, payment of bills and so on. But, in debit cards charges are only made based on the

    transactions an individual makes or during withdrawals (Shy, Pg. 92).

    Limits of withdrawal is also a difference between credit and debit cards. In cases of credit

    cards, one’s maximum limit of withdrawal depends on the credit rating one has, while the

    maximum limit one has in a debit card depends on the cash balance found in the account.

    Overdraft also tends to differ in both cards. For instance, credit cards tend to have a low

    rate of an overdraft facility, while debit cards tend to have a high rate of overdraft facility

    (Ching).

    In conclusion, it evident that debit and credit cards have eased the problem of carrying

    huge amounts of money or a checkbook every time with us. Therefore, if you have sufficient

    cash in your bank account, a debit card would be your better option. But, if you have insufficient

    funds and no bank account and your credit rating is good, then choosing a credit card may suit

    you. Therefore, one should choose wisely on the card that suits him more based on your

    requirements.
    Student’s Last Name 4

    Work Cited

    Zinman, Jonathan. "Debit or credit?." Journal of Banking & Finance 33.2 (2009): 358-366.

    Shy, Oz, and Zhu Wang. "Why do payment card networks charge proportional fees?." American

    Economic Review 101.4 (2011): 1575-90.

    Ching, Andrew T., and Fumiko Hayashi. "Payment card rewards programs and consumer

    payment choice." Journal of Banking & Finance 34.8 (2010): 1773-1787.

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy