U2 L9 Debit vs Credit Cards Flashcard

Front

What is a debit card?

Back

A payment card that deducts money directly from a consumer's checking account to pay for a purchase.

Front

What is the main function of a credit card?

Back

To allow the cardholder to make purchases and pay for them at a later date.

Front

How are debit and credit cards used differently?

Back

Debit cards use the cardholder's own money, while credit cards allow people to borrow money up to a certain limit.

Front

What are the typical fees associated with a debit card? Options: Monthly maintenance fees, ATM withdrawal fees, overdraft fees, and foreign transaction fees, Cash deposit fees, Annual membership fees, Online banking fees

Back

Monthly maintenance fees, ATM withdrawal fees, overdraft fees, and foreign transaction fees

Front

What are the typical fees associated with a credit card?

Back

Annual fees, late payment fees, balance transfer fees, cash advance fees, foreign transaction fees, and over-limit fees.

Front

What are the advantages of using a debit card?

Back

There are no interest charges, helps control spending, no risk of debt accumulation.

Front

What are the disadvantages of using a debit card?

Back

Does not help you build credit

Front

What are the advantages of using a credit card?

Back

Convenience, rewards, build credit history, purchase protection, and fraud protection.

Front

What are the disadvantages of using a credit card?

Back

Possible overspending, high interest rates, potential debt accumulation

Front

When would it be better to use a debit card instead of a credit card, and vice versa?

Back

It depends on the purpose of the transaction and your ability to pay off the amount.