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The difference between credit and debit cards
In this guide we’ll cover the basics, helping you to make the most of your cards.
A quick summary
You can use credit and debit in cards similar ways, but there are differences which are handy to know about, and could influence what you choose to use them for. These include:
- Card features and benefits.
- The costs for using your card at home and abroad.
- Your responsibilities if you choose to use credit.
What is a debit card?
- It’s linked to your bank account. When you use it, money is taken from your account.
- You’re basically spending money that’s yours, unless you have an overdraft, which is a type of credit linked to your account. Interest and charges may apply to overdrafts.
- You can use a debit card to withdraw cash from ATMs, or pay for goods and services.
What is a credit card?
- It’s a standalone account, giving you access to credit that you’ll need to pay back later. Essentially, it’s a form of borrowing.
- You’re not spending your own money. Instead you’re using a pre-agreed credit limit, which could help you to spread larger expenses and manage everyday essentials.
- You can use a credit card to withdraw cash from ATMs, or pay for goods and services. Just bear in mind interest and charges may apply.
Understanding the costs
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One thing which could sway your decision between using a Lloyds Bank credit or debit card, is any additional transaction costs:
Card transaction type vs costs table
Transaction type
Debit card costs
Credit card costs
Transaction type
Cash equivalents, including gambling transactions, using your card to make transactions at casinos, betting outlets and bookmakers, and buying online lottery tickets or gaming chips, share trading or spread betting, buying foreign currency, sending money orders or wire transfers (other than balance transfers or money transfers), buying coins, banknotes or digital currency, paying government or court fines, enforcement penalties, fees or costs, online trading such as share dealing or investments, purchasing or topping up electronic money, payment cards, mobile wallets or account dashboard services.
Debit card costs
Free
Credit card costs
A cash transaction fee and interest may apply.
Transaction type
Cash withdrawals at a Lloyds Bank Cashpoint or branch
Debit card costs
Free
Credit card costs
A cash transaction fee and interest may apply (this service is now only available at a Lloyds Bank Cashpoint).
Transaction type
Cash withdrawals at another cash machine or branch
Debit card costs
Lloyds Bank won’t charge, but the owner of the cash machine may. Check for charges before you go ahead.
Credit card costs
In addition to any cash machine charges, a cash transaction fee and interest may apply.
Transaction type
Card purchases
Debit card costs
Free
Credit card costs
Free (If you do not pay your balance in full every month, then interest may apply).
Transaction type
Buying foreign currency from Lloyds Bank
Debit card costs
Free
Credit card costs
A cash transaction fee and interest may apply.
Transaction type
Buying foreign currency or travellers cheques from another branch, agent, or bureaux de change
Debit card costs
Lloyds Bank won’t charge, but other providers may. Check for charges before you go ahead.
Credit card costs
In addition to other provider charges, a cash transaction fee, foreign currency fee and interest may apply.
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Again, it depends on the terms and conditions of your Lloyds Bank accounts, but additional charges usually apply when using a credit or debit card abroad.
Other things to consider
Key points about credit and debit cards
- A debit card is linked to your bank account. It’s usually your money that you’re spending or withdrawing, unless you have an overdraft, which is a type of credit linked to your account.
- A credit card is a standalone account giving you access to a pre-agreed credit limit. When you spend or withdraw cash, you’re borrowing money you’ll need to pay back later.
- Any transaction costs can vary between credit and debit cards, so it’s helpful to understand the fees and charges which may apply, both at home and abroad.
- Interest may apply to any amount of money you borrow, either using a credit card or overdraft.
- If you choose to use credit, it’s important to manage your account and payments well to avoid additional fees, charges and any impact to your credit record.
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