That is used for restrictive clauses. Which is used for nonrestrictive clauses.

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Sample Statements

The house that has a big backyard is up for sale. The house, which has a big backyard, is up for sale.

Use of That

Here, the clause that has a big backyard is a restrictive clause. It is providing us an essential characteristic of the house, which sets it apart from the other houses. Without this clause, we will not understand which house the person is talking about.

Use of Which

From this sentence, we understand that the person is just providing extra information through the nonrestrictive clause which has a big backyard. It is useful, but not necessary. Drop this clause, and the sentence would still mean the same in context.

Examples of Using Which

The unexpected package, which had no name, contained brand new shoes. His version of the story, which I found convincing, was discredited by the jury.

American vs. British English

The distinction between which and that, as explained before, holds importance in American English. However, people who use British English commonly use which for both, restrictive and nonrestrictive clauses.

Tip to Remember the Difference

I would say—Look for the clause! If the clause talks about something essential, use that. If not, go for which.