The card issuer will usually review your credit score and credit history to see what your financial situation is. When you apply for a credit card, the credit card issuer (usually a bank, credit union, or credit card company) reviews your application to determine whether they trust you enough to loan money to you. Where does the money on a credit card come from?Ī credit card is a payment method that represents an open-ended loan made by a credit card issuer. The basic facts: how does a credit card work compared to a debit card?īoth credit cards and debit cards are ways to make purchases using an account number and card-specific information, either entering it online, by swiping the card, inserting the chip or using your mobile wallet.Ĭhart comparing debit cards with credit cards Both credit cards and debit cards offer a way to make purchases and transactionsĬredit cards may have fees and costs that debit cards do not, but may also offer greater financial flexibility, help you build credit history, and have additional fraudulent transaction coverageĭebit cards are tied directly to money that you have available in your bank account, and can make it easier to stay within your financial meansĪ debit card is a card that’s tied to a checking or savings account, which means that there is physical cash available in the bank that is linked to the payment card.Ĭredit cards, on the other hand, are loans from a bank or financial institution that allow the cardholder to make purchases without necessarily having the available cash.
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