Final answer:
Debit and credit cards are similar in allowing cashless purchases, but they have distinct differences in terms of source of funds, interest and fees, and impact on credit history.
Step-by-step explanation:
Debit and credit cards are similar in that they both allow you to make purchases without carrying cash. However, there are three main differences between them:
- Source of funds: With a debit card, the money comes directly from your bank account, so you need to have sufficient funds in your account to make a purchase. On the other hand, a credit card allows you to borrow money from the credit card company to make a purchase, and you need to pay it back later.
- Interest and fees: When you use a debit card, there are usually no interest charges or fees involved. However, with a credit card, if you don't pay off the full balance by the due date, you may be charged interest on the remaining balance, and there might be other fees as well.
- Credit history: Using a debit card does not affect your credit history or credit score. However, responsible use of a credit card can help you build a positive credit history, which can be helpful for future loans and financial transactions.