Question

Which of the following statements comparing debit cards to credit cards is TRUE?

Answer 1

Answer:

The correct option is option (A) which is debit cards allow you to draw funds directly from your checking account.

Further Explanation:

Debit card and credit card might look similar but they have some difference in their working. Both debit cards and credit cards can be swapped to purchase goods and services. The main difference is where the money is drawn when purchase is done. If you uses debit cards the money comes from your account. On the other side, if you use the credit card the money is taken from your credit limit for which you should pay at a later date.

The key differences between credit card and debit card include:

• Debit cards deduct money from your bank account. Credit cards give you the credit limit issued by the financial companies or banks.

• Credit cards provide you better security by fraud protection and warranties. Debit cards provide you less securities but having less fees.

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Answer details:

• Grade: Senior Secondary School

• Subject: Business Studies

• Chapter: Banking System

Keywords:

Credit card, debit card, banks, financial companies. Length of credit history, payment history, amount owed, types of credit used, following statements, fraud protection, draw money, bank accounts, interest rates, signature, funds, checking account, purchase

Answer 2

The question has a few multiple choices one can choose from;

A. Debit cards allow you to draw funds directly from your checking account. 
B. Debit cards typically offer greater fraud protection than credit cards.
C. Debit cards never require a signature to finalize a purchase like credit cards.
D. Debit cards charge higher interest rates on purchases than credit cards

The Answer is (A) Debit cards allow you to draw funds directly from your checking account.

Checks were replaced by Debit cards as a way of paying for goods or drawing funds from your checking account. Since your debit card comes with your checking account, its simplicity will work nearly everywhere a credit card works. Adding a credit card to your checking account is just adding a layer of complications to your finances.
The fact that a debit card draws on money you already have, those who spend a lot would do well with debit cards and avoid the temptation of credit.