Both terms refer to bags used for carrying personal items. Both are commonly used by women. Both can be made from a variety of materials like leather or fabric.
In American English, "purse" commonly refers to a small item used to carry money, often synonymous with a wallet, while "handbag" typically refers to a larger bag that can hold a variety of personal items. In British English, "purse" can also refer to what Americans call a wallet, whereas a "handbag" is the larger bag like in American English.
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