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  4. How to differentiate between a credit card and a debit card

Debit cards and credit cards are convenient ways to carry money without having to carry cash. The difference is on what funds the card uses in making a purchase.

With a debit card, you are using money that is available in your checking account.  A debit card purchase is similar to cash as you’re not borrowing money to make a purchase. When funds run out of your checking account, your debit purchase will be declined.

A credit card, on the other hand, is using credit to make a purchase. The credit is authorized by the credit card issuer and you’re required to repay the advance on the due date. Finance charges may accrue for using credit for purchases as well as additional fees.

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