Credit, debit and charge cards, oh my! – Part 1

Understand terms and conditions before signing on the dotted line.

Today, consumers have a variety of products and services to choose from to help make their shopping experiences quick, easy and efficient. With so many options it is important to understand their similarities, differences and potential fees. This article will highlight debit cards and charge cards.

Debit cards allow consumers to make purchases by withdrawing financial resources from checking and or savings accounts electronically. They are also known as bank cards or check cards and carry a credit card logo (i.e. Visa, MasterCard, Discover, etc.). Things to consider with this type of payment:

  • They reduce the need to bring cash or a checkbook when shopping.
  • They are accepted wherever the logo on the card is accepted: i.e. merchants, restaurants, gas pumps, etc.

(Tip: Some gas stations may hold an amount over the gas purchase price, until the transaction clears. Be cautious of this to avoid a negative checking account balance which could lead to costly Non- Sufficient Funds (NSF) fees, and or overdraft protection fees if you have enrolled in this program).

  • They can be used at ATMs to make cash withdrawals, so be sure you know and understand the fees associated with using a non-participating ATM machine.
  • They are connected to checking accounts so it is important to reconcile this account and review the corresponding statement monthly.
  • If you Opt-In for a Bounce Protection program on your checking account, know and understand the terms, conditions and fees.
  • If you connect your checking account to your savings account, know and understand the terms, conditions and fees associated with fund transfers.
  • If you are a victim of identity theft with your debit card, be sure you know and understand your lenders process and timeline for disputing charges and filing a claim.

(Tip: For more information on how debit cards and credit cards differ, visit

Charge cards are a specific type of credit card that requires balances to be paid in full when statements arrive. Balances cannot be rolled over from one billing cycle to the next as with credit cards. Using charge cards, like credit cards can help consumers build credit history when used responsibly.

The next article in this series Credit, debit and charge cards, oh my! – Part 2, will focus on credit cards.

For a variety of financial resources, including how to develop a monthly budget and set financial goals, visit Michigan State University Extension. In addition, Michigan State University offers money management and homeownership classes. For more information about classes offered in your area visit MI Money Health.


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