Describe how debit and credit cards are similar and list the three main differences?

Debit and credit cards are extremely similar, they look the same, and can be used in the same way, it is the actual funding side of these cards where the difference comes into play:

1. A Debit card is linked straight to your checking account, and therefore you need to have the money avialable in your account before you can use it for payment. A Credit card is linked to a Credit account with your bank, where they give you money you don't have, and therefore you can make a purchase, even if you do not have a positive balance on a credit card.

2. As you have the funds in your account for a Debit card, you do not pay interest on your purchases, whereas with a credit card you do. However if you have an overdraft facility on your checking account, you may pay interest if you are over drawn.

3. Most of the time with Credit cards, everytime you spend you earn some form of rewards points. Most banks however do not issue these rewards on a Debit card.