All Financial Education

Understanding the Difference Between Debit and Credit Cards

May 24, 2021

Couple using credit card for online purchase

If you’re new to credit cards, it may seem confusing at first to determine what the difference is between a credit card and a debit card. They look the same, are accepted at many of the same places, and serve the same function. You need to make a purchase? Take out your card, run it, and your purchase is complete! Though the process of using a debit card and a credit card are very similar, if not identical at times, the back end process is what makes all the difference. Debit cards pull funds directly from your account. This means that in order to use your debit card, you have the money available already. Essentially, it is the same as paying with cash. Credit cards, however, are loans. When you use a credit card, you are taking out a loan for that amount, with the promise to repay it later. If you are at the stage in your life where you are considering getting a credit card, it’s important to know the differences between debit and credit so that you know what benefits you have, what benefits are possible, and what benefits you may be missing out on.

What benefits are offered for both?

There are benefits that all cards from Idaho Central have, offering you peace of mind and helping you to know that you are taken care of. At Idaho Central, we are proud to offer our members automatic card fraud monitoring for all ICCU cards. If fraud is found, our cards are also protected by Visa’s zero fraud liability, protecting your accounts from losses. In addition, we also offer CardControl, a free app that allows you to stay in control of your cards. You turn them off and on as needed, set spending limits, define approved types of transactions, receive real-time alerts, and protect your card from theft.

What’s right for you? 

Once you understand the differences and similarities between a debit card and a credit card, the next step is to decide what is right for you. As exciting as getting a credit card may seem, it’s important to make sure you’re ready for one. If you’ve never had a credit card before, using your debit card responsibly and figuring out your budget is a good first step to take. Once you’re ready to take the next step and open a credit card, you’re faced with even more options in determining which card is right for you. At Idaho Central, we’re ready to help.

You may be new to building credit, or had some credit issues in the past that you’re looking to come back from. If this is you, we offer credit builder and credit rebuilder products to get you started on your journey to great credit. Our Fixed-Rate Platinum Visa offers the security of a fixed rate, and our Variable-Rate Platinum Visa may be best if you need a low rate on your monthly balance. We also offer our Rewards Visa, which is a great option to start earning rewards on all of your purchases with a lower interest rate on your monthly balance. A Premier Rewards Visa, however, is perfect for the borrower that wants to maximize rewards and perks, and doesn’t typically carry a balance each month.

Did you know that credit unions have capped interest rates? Some financial institutions have high interest rates, but the good news is that credit union interest rates can’t go above a certain threshold. That way, you can rest assured that your ICCU credit card will have one of the best rates available on the market! If you are shopping for a credit card with a great rate, you can view all of our card options and their rates at any time on our website here. At Idaho Central, we also offer no balance transfer fees, low interest rates, and great rewards options to choose from. To make your decision even simpler, you can view all of Idaho Central’s credit card options to easily compare here.

What do you need to know about rewards?

If you have a rewards card, it’s important to know how your rewards program is structured. It’s not uncommon to be lured into a seemingly great credit card offer with flashy advertisements telling you about their high cash back percentage. Though that 3% cash back may seem appealing, take a close look at what it really entails. Many cards may offer a large amount cash back for certain purchases, but a small amount cash back for your everyday purchases. For example, you may have a credit card that offers 3% cash back on travel, and 1% on everything else. If you doesn’t spend much on travel, your overall cash back may be much lower than you anticipate from the initial claim of 3%. Depending on how you plan to use your card, it may be best to find a card with a straight-forward point system for a fixed amount of points for each dollar spent.

In addition to knowing how you receive rewards, you will want to know how your rewards are redeemed. Many people love their travel cards, but these are often only redeemable for travel, not cash back. Maybe you saved up all of your points for the year to go on a big family vacation, but then had a family emergency come up and needed to postpone your plans. If your rewards are only redeemable for travel, then you wouldn’t have the option of cash back to use for the emergency or other unexpected expenses. Considering this, it may be best for your card to have flexible redemption options, letting you plan for your fun family trip, while also allowing you to use the rewards like cash. At Idaho Central, our reward points are redeemable for cash back, travel, gift cards, merchandise, and more. Choosing the right rewards card for you is the best way to make sure you are making the most of your business credit card. Our Premier Rewards Visa offers 2 points per $1.00 spent on all purchases, offering you great cash back on every purchase you makes, not just a small percentage of them. Don’t forget to keep an eye out for future promotions to get even more rewards out of your card!

What extra benefits are there?

After going through all of the work of picking out the right card, budgeting, making sure your security is in place, and maximizing any rewards, you may feel like you’ve tapped out all of the benefits of your credit card. Luckily, that may not be the case! Idaho Central offers great credit cards with extra benefits that you may not be aware of. This includes auto rental collision damage insurance, travel and emergency assistance services, purchase security and extended protection, and more. Do you have big travel plans in the future? You can even level up your extra benefits with our Premier Rewards Visa card, which comes with Visa’s Concierge service. This concierge service can help you plan your trip, reservations and recommendations included!

Apply for your credit card today and start taking advantage of all of the great benefits that come with an Idaho Central Visa credit card!