What's the difference between a debit card and a credit card?

What's the difference between a debit card and a credit card?

When your child is ready to have their first payment card, you might be wondering about the difference between credit and debit cards, as well as how this affects your child. Let's look at what the differences are and what kind of cards your child could have access to.


Related: What age can you get a debit card?


Key points about debit and credit cards

A debit card is linked to a bank account. Usually, a debit card only lets you access the money in that account, but if you have an overdraft you could use a debit card to borrow money from the bank. A credit card lets you borrow a prearranged amount from your credit card company, which you will have to pay back. Both can be used in shops and online.

What is the difference between a credit card and a debit card?

The main differences are:

  • Credit cards only let you borrow money.
  • Debit cards are used to spend money you already have.
  • Debit cards let you borrow money if you have an agreed overdraft.
  • A credit card helps build credit history while a debit card doesn't.
  • A debit card is linked to a checking account while a credit card has a standalone account with a credit limit.

What is a debit card?

The most common type of standard debit card links to a checking account, which is the usual type of bank account that most people have. This is convenient for a lot of people as they often get paid into a checking account, so a debit card lets them spend their money in shops and online, and withdraw it at an ATM. If you have an agreed overdraft you can borrow money from the bank using your debit card. When there is nothing left in your bank account and you spend too much, money comes out of the overdraft. However, if you do not have an overdraft arranged and spend more money than you have in your account, you may be charged fines by the bank.


You can also get prepaid debit cards where the card is not linked to a bank account and instead, a set amount of money can be loaded onto the card. You can spend the money by using the prepaid card in shops, for online payments, or for withdrawing cash, just like a regular debit card. However, prepaid debit cards don’t let the user spend more money than is available on the card. This stops people from getting into debt or having an overdraft.

Advantages of a debit card

  • More secure than cash
  • No risk of debt when using a prepaid debit card
  • Can be used in stores, online, and at cash points
  • Convenient way to access your money
  • Contactless payments are quick and easy
  • Both MasterCard and Visa provide zero liability fraud protection

Disadvantages of a debit card

  • Potential fines for unplanned overdrafts
  • Debit cards don't help build your credit rating
  • Getting a planned overdraft requires credit checks

What is a credit card?

A credit card is used to access money that is borrowed from a bank or other financial companies. The money, as well as interest, will need to be paid back. You don't have any money in your account for a credit card, you can only borrow money up to a certain limit.


Credit card limits can be anywhere from hundreds of pounds to thousands. People take out credit cards for a wide range of different reasons. Some people want to transfer their bank balance to a different credit card so that they can take advantage of a lower interest rate. There are also credit cards that offer rewards such as points or cashback on purchases.

Advantages of a credit card

  • Large purchases can be made and then paid off over time
  • Helps build a credit history
  • If you pay off the credit card in full each month, you won’t be charged interest on your transactions
  • Some credit cards have rewards or cashback
  • Both MasterCard and Visa provide zero liability fraud protection

Disadvantages of a credit card

  • Once someone is in debt, it can be hard to pay it all off
  • Credit cards may encourage overspending
  • If you don’t pay off the card in full each month, then you incur interest charges, which means you’ll pay back more than you originally spent
  • Your credit limit will depend on your credit rating—a low credit rating would reduce your credit limit
  • Some credit cards have very high-interest rates
  • Late repayment can lead to fees
  • Making late payments can impact your credit rating

Is it better to use a debit card or credit card for certain transactions?

When weighing up a debit card vs credit card, you’ll need to look at the type of purchase you’re making. A prepaid debit card can be the safest method to use for transactions because you can’t spend more money than is on the card. A lot of people use debit cards for most of their purchases since it’s an easy way to access the money they have been paid. However, sometimes it is helpful to use a credit card for large purchases when you want to split the cost across multiple months, or when you want better fraud protection.

How old do you need to be to get a debit card?

With most banks, you need to be 11 years old to get a debit card for a checking account. However, you can’t open a bank account at age 11 without help from a parent or guardian. With GoHenry you can set up an account for your children from the age of 6. Once you decide when your child should have a debit card, the GoHenry prepaid debit card gives them a safe way to spend their money, as well as other features that can help increase their financial knowledge and make sure that you can keep an eye on their spending.

How old do you need to be to get a credit card?

Only people over 18 years old can apply for a credit card, you might want to discuss with them whether or not they should have one. Credit cards can encourage overspending and you should make sure that your child has good knowledge of debt and borrowing before they are able to get a credit card. Getting your child their own debit card can help make sure that they are familiar with payment cards and can help prepare them to make sure they are responsible when they get a credit card.

Tips on how to explain the difference between a credit and a debit card to your kids

It’s important to explain that kids can't get a credit card when under 18 years old, but they can get a debit card. You can also explain that a debit card lets them use money they have, while a credit card lets them borrow money from a bank. It's also important to explain what debt is, and the fact that they would have to pay back more money than they borrow due to interest.


If you're looking for ways to explain borrowing & credit to your children, try our in-app Money Missions. These bite-sized lessons are tailored to your child's age and cover everything they need to know about spending money. This includes an intro to investing, spending wisely, and money safety.


Get started with GoHenry today to see how our prepaid kids debit card can help prepare your kids for a solid financial education.



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Written by GoHenry Published Oct 19, 2022 ● 6 min. read