Credit Cards

• When you use a credit card, you are essentially taking out a loan. Credit cards can be a good for building credit history. This, of course, only works to your advantage if you pay your bills on time. If you make late payments or are delinquent altogether, you will ruin your credit. Credit cards can be dangerous if you can't control your spending. They make it easy to impulse buy. You can max out your card doing so and be in credit card debt before you know it.
  
  

Debit Cards

• Debit cards work like writing a check. The money comes directly from your checking account every time you use the card. Debit cards can help you control your spending because if the money isn't there, you can't make the purchase. Debit cards, however, do not establish credit.
  
  

Features

• Credit cards and debit cards look alike, and they both replace your need to use and carry cash. If someone steals your cash, you are completely out of luck. If someone steals your debit or credit card (or gets your debit or credit card information from a card skimmer that reads your information), you have certain protections.
  
  

Function

• You have more protection against fraudulent activity with a credit card than with a debit card. If you have a fraudulent transaction on your credit card, you can dispute the transaction before you have to pay for it. This is not the case with a debit card. A thief can empty your entire checking account. Your bank will likely replace the funds that were fraudulently removed. But, it could take two weeks for an investigation to take place. Meanwhile, you do not have access to your money.
  
  

Considerations

• Credit cards often come with extra benefits, such as rewards programs whereby you receive cash back, airline tickets, gift certificates or other merchandise. Some credit cards also offer extended warranties on big-ticket purchases. If you carry a balance on your credit card, you could be paying much more for an item than its retail cost, especially if you have a credit card with a high interest rate. Debit cards have no interest charges or late payment fees.