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Money basics

Lesson 17 · Written for kid, teen, and little

Debit Cards vs Credit Cards

A debit card uses money you have; a credit card borrows money you repay.

The idea

A debit card normally spends money that is already in your bank account. Some accounts let a payment go through without enough money, creating an overdraft that may cost extra. A credit card borrows money from a lender, and a bill for what you borrowed arrives later. If you pay that whole bill on time you usually owe nothing extra, but if you leave part unpaid the lender charges interest and the same stuff ends up costing more. Both cards look almost identical, so the real difference is where the money comes from. 💳

A

Words to know

5

debit card

A card that uses money in your bank account. A purchase may be declined if the balance is too low, or overdraft rules may apply.

credit card

A card that borrows money you have to pay back later. You can buy the $15 thing with $12 — and then you owe $15.

borrow

To use someone else's money now and give it back later. Every credit card purchase is borrowing.

bill

A note telling you how much you owe and when to pay it. Your card sends one every month.

interest

Extra money a lender charges you for borrowing. Carry $100 on a card and you might be charged about $2 that month.

Try it — no accountSort into groups

The cards look alike, but they work very differently.

Sort each clue under the card it describes.

0 / 6 sorted

In the full lesson

  1. 1Sort into groups
  2. 2Put it in order
  3. 3Make the call

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