Debit vs. credit cards—know the difference

What is a debit card?

Debit cards are linked to your bank account, giving you access to your balance. You can use them to make purchases in stores or online, or withdraw from ATMs. They’re easy to use and mean you don’t need to carry physical cash.

In some cases, you can borrow money from a debit account using overdraft, which allows your balance to go into the negatives. But there are often extra charges for this, especially if you haven’t arranged it in advance with your bank.

What is a credit card?

Credit cards borrow money from the card issuer every time you make a purchase. Each payment you make gets added to your total outstanding balance, which you’ll have to pay back later, along with any interest required.

Credit cards offer lots of advantages, like quick access to funds, building your credit rating, cashback rewards, fraud protection and more. But they can also be risky—if you aren’t able to pay back your outstanding balance, your credit score will drop and the interest can add up.

What is a pre-paid card?

Pre-paid (or top-up) cards work as a fixed payment system—you load money onto the card from another account or with cash. This amount isn’t linked to your bank account, so you never have to worry about overspending.

They’re great for setting budgets or cutting down on carrying cash. Plus, they’re usually reloadable, and you generally don’t need a credit check to get one. However, they can include multiple fees so make sure you read the fine print.