Chapter 14, Problem 1.1PA

To determine

Difference between debit and credit card.

Explanation of Solution

Using a debit card is just like using cash because, in order to use debit card, one must have balance in the account so that he/she can clear the transaction made with the debit card. Without having balance in the bank account, one cannot use the debit card. On the other hand, credit card is just like loan that does not require minimum balance in the account in order to use the card. But the holder of the credit card has to pay back the money borrowed with the credit card.

Economics Concept Introduction

Introduction:

Debit card is a card that allow card holder to transfer money to other’s account or to pay for the purchase of goods and services. It also allows holder to transfer money available in the bank account.

Credit card is a card that allow card holder to transfer money or to pay for the purchase of goods and services. It also allows holder to transfer money above available balance in the account but only up to a certain limit.