Debit Card: What It Is, How It Works, and How It Differs From Credit
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Key terms
- Credit Card DebtMoney owed on credit cards that carries over from month to month, accruing interest. The average American household carries over $6,000 in credit card debt at 20%+ APR.
- Credit Card PointsRewards earned on credit card purchases that can be redeemed for travel, merchandise, gift cards, or statement credits. Value varies by card but typically 1 point = 1 cent.
- Store Credit CardA credit card only usable at a specific retailer or group of retailers. Often offers discounts and rewards but typically has higher APRs (25-30%) than general-purpose cards.
- Business Credit CardA card designed for business expenses with higher credit limits, employee cards, and expense tracking. Builds business credit separately from personal credit in some cases.
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