Which statement most accurately compares debit and credit cards?
A.
Both cards deduct from funds currently in a checking account.
B.
Both cards use funds temporarily loaned from a financial institution.
C.
Both cards are processed by the same card system services.
D.
Both carry the risk of overdraft.
To compare debit and credit cards and determine which statement is most accurate, we need to understand the characteristics of both types of cards.
1. Debit cards: Debit cards are linked directly to a checking account. When you use a debit card to make a purchase or withdraw cash, the funds are immediately deducted from the available balance in your checking account. Therefore, the statement that most accurately describes debit cards is:
A. Both cards deduct from funds currently in a checking account.
2. Credit cards: Credit cards, on the other hand, provide a line of credit that is temporarily loaned to you by a financial institution. When you use a credit card, you are essentially borrowing money from the credit card issuer to make the purchase. You are required to pay back the borrowed amount, usually with interest, within a specified period.
Although both debit and credit cards are processed through payment networks like Visa or Mastercard, the card system services alone do not accurately compare these two types of cards. Additionally, while both debit and credit cards carry the risk of incurring fees or charges, the specific risk of overdraft is typically associated with debit cards rather than credit cards. Therefore, statement D is not the most accurate comparison.
In conclusion, the statement that most accurately compares debit and credit cards is:
A. Both cards deduct from funds currently in a checking account.