What is the difference between debit and credit cards?

The distinction between debit and credit cards lies primarily in how they draw funds and the nature of the spending involved. Debit cards are directly linked to a user's bank account, meaning that any purchase made with a debit card subtracts money from that account immediately. This provides users with a real-time reflection of their available balance and typically encourages responsible spending since it limits them to what they already have in their account.

In contrast, credit cards enable users to borrow money up to a predetermined limit, giving them the flexibility to make purchases even if they do not currently have the funds available in their bank account. This borrowing capability can lead to accumulating debt if not managed properly because the user will need to pay back what they borrowed, often with interest.

The other options presented do not accurately capture the essential functions and benefits of debit and credit cards, focusing on misunderstandings of their features or costs associated with their usage. Understanding this difference is crucial for effective personal financial management.