Debit vs Credit

Debit versus credit. What's the difference? How fast is credit card use growing? How can it get you in trouble, fast? And what are banks doing to prepare for our generation's needs in how we want to handle money or forms of it? Answers to those questions and more coming up in season 2 episode 4 of the Cash Kid Podcast. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

Debit vs Credit

Hey Cash Kids! Ready to test your financial literacy skills even further today? We are in season 2, episode 4 of the Cash Kid Podcast where we are working to build super financial skills. If you haven’t already, go back and listen to past episodes as each one builds on the next.

Today, debit vs. credit. Do you really know the difference between them? How fast is credit card use growing? Can it get you in trouble? And what are banks doing to meet our generation's financial needs? Those answers and more are coming up! The Cash Kid Podcast is underway.

Intro tease:

So you’ve got some cash. Maybe from an allowance, or that money your grandma gave you for your 7th birthday. Here you go, sweetie. Thanks, Grandma.

Whatever it is, what are you going to do with it? Spend it, hide it away... or maybe invest it? Let’s start learning how to make that money grow.

Time to learn how to be a cash kid.

Joining me again today is Mrs. Amy Greer with Cadence Bank.

She is the Director of Digital Transformation where she works to make sure customers have a great experience online or in banks apps, including all types of money movement that we will talk about today.

Thank you, Mrs. Greer, for joining us on the show again. Let’s get into it.

Cash Kid: So what is your definition for debit?

Amy Greer: Well, a debit card is actually a tool that's connected to a checking account that allows you to use that at various places, such as stores and any merchants is what they are called that accept card payments, which is pretty much everywhere nowadays. But it is a way to to pay for for goods or services, and it comes directly out of your checking account.

So you have to have the funds in the account in order for it to process. It's not money that you're borrowing, and so it's not credit, which I know we'll talk about in a little bit, but it's actually linking to the cash that you have sitting in your checking account. And so it's just a quick and easy way to pay for things.

And it also helps guarantee that you have proof of purchase and kind of like a digital receipt. And because then you can go back and look and see what you spent where in the super helpful in that way.

Cash Kid: So to clarify, debit is cash you actually have in your checking account. Right.

Amy Greer: That's right. It's your money in your account. And debit is just the tool that you use to get to to pull the money out, to pay a person.

Cash Kid: How did people pay for things before debit cards from their checking account?

Amy Greer: So lots of checks. Lots of lots of recording checks in the check register, like I mentioned. So people would pay with checks and cash was a lot of cash. And there's been a huge decrease in just the amount of cash that the government even makes now, paper cash. Because of because of the digital currency and things that are taking over.

Cash Kid: What brought about the need for debit?

Amy Greer: The need for debit, I think, really began out as just the fact that cash was getting harder to keep up with. Checks were people were trying to be more environmentally friendly and not write as much paper. And so this concept of the debit system, that electronic money movement kind of was birthed. And it's really again, it's back to it gets money places faster and safer and there's a trail for you to track it.

Cash Kid: How do people mostly use debit as a form of payment?

Amy Greer: Most people use debit as a form of payment at what we call point of sale, which that means you're at a store or another name you'll you'll learn over the years as a merchant. And so really, as you as you are buying something in the gas station or you're buying something, you know, at a concession stand or at an event, that's the point of sale purchase is when you tap your card or insert your card or swipe your debit card. There's all different options these days. That's where most of the transactions occur. It's not as readily available to use your debit card to pay another individual. That's where some of the digital forms of payment come in, where you can send money digitally to different accounts like Venmo and things that we've talked about.

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Cash Kid: All right. Let's switch to credit. I feel probably, most people hear this term more than debit. What is your definition of credit?

Amy Greer: So credit in the simplest sense is really an account that's established. But ...