While credit cards and debit cards look identical, they function in very different ways. With a credit card, you’re borrowing money from the credit card issuer. With a debit card, you’re using money from your checking account to pay for purchases. To use a debit card, you also need to enter your PIN.
You can also use a debit card to take cash out of your checking account. You can do this at an ATM or when you make a purchase. Some credit cards allow you to access cash by taking a cash advance, but these transactions tend to have higher interest rates than purchases and they may not have a grace period. In other words, you must pay interest on the advance.
| Credit Card | Debit Card |
|---|---|
| Allows you to borrow against a credit line | Allows you to electronically deduct purchases from your checking account |
| You may have to enter your billing ZIP code to make a purchase | You may have to enter your PIN to make a purchase |
| You may be able to withdraw cash by making a cash advance | You can use it to withdraw cash from your checking account |