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Ages 10+ · Money · Credit and loans
Debit or credit?
Debit• My own coins go now• The account falls at the tap• Only what the account holdsCredit• The bank's coins go now• A bill comes at month's end• My coins go later
Debit or credit: whose coins go first?
The big ideaDebit uses my own coins now. Credit uses the bank's coins now and mine later.

How it works

Ru's account at the village bank held 20 coins, all Ru's own. With debit, the 6 coins for the book left the account at once, so it said 14.

A debit card can only spend what the account holds. With only 4 coins, the 6-coin book is a no, and nothing is owed.

With credit, the bank paid the shop 6 coins, the bank's coins, so Ru's account still said 20. A bill for 6 came at month's end, and when Ru paid it the account said 14, just like debit.

If Ru paid only 2, then 4 would still be owed, and the extra for waiting would start to grow. Neither card is a gift: each changes whose coins go first, and when.

The account at the tap0510152020Start14Debit20Creditcoins
Ru's account at the moment of each tap.
Ru taps creditThe bank paysthe shop 6A bill comesRu pays thebank back
A credit buy.

Example 1: A debit tap

  1. Ru's account holds 20 coins.
  2. Ru taps debit for the 6-coin book.
  3. The account falls at once: 20 − 6 = 14.

Example 2: A credit tap

  1. Ru taps credit for the same book.
  2. The bank pays the shop 6, so the account still says 20.
  3. A bill for 6 comes at month's end.

Example 3: Paying the bill

  1. At month's end Ru pays the whole 6 to the bank.
  2. The account then says 20 − 6 = 14, the same as debit.
  3. There is no extra in this village when the bill is paid in full.

Example 4: Paying only part

  1. Say Ru pays only 2 of the 6.
  2. Then 4 coins are still owed, since 6 − 2 = 4.
  3. The extra for waiting starts to grow on what is left.

Words to know

debit
Spending your own coins from the account, right now.
credit
Spending the bank's coins now and paying them back later.
bill
What is owed, due at month's end.
account
Where Ru's own coins are kept safe.

Watch out

Try it

  1. Ru's account holds 20. After a 6-coin debit buy, how many coins does it hold?
  2. Ru pays 2 of a 6-coin bill. How many coins are still owed?
  3. With credit, whose coins go first?
  4. With 4 coins in the account, can debit pay for a 6-coin book?
Answers: 1. 14 · 2. 4 · 3. The bank's · 4. No
Try at homeWith a grown-up, name three pretend buys, and say for each whether a debit or a credit card would use whose coins first.
For grown-upsPretend coins in a made-up town. Ask your child to explain in their own words why neither card is a gift. Keeping a real card safe is covered in Digital Life.
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