Credit Cards in comparison to. Debit Cards: A Review

Debit and credit cards are typically similar, with 16-digit numbers on the card, the expiration date, magnetic strips, and EMV chips. 1 Both allow you to be able and easy to purchase at the store or online, however, there is one significant distinction. Debit cards let you spend money using the funds you have already deposited with the bank. Credit cards permit you to get money from the issuer up to a specific amount to purchase goods and withdraw money.

There’s a good chance that you have at most one credit card and at least one debit or credit card in your purse. The convenience and security provided are difficult to compare, however, they come with important differences that could significantly impact your budget. This article will help you pick which one to meet your budget needs.

What Is a Credit Card?

Credit cards are issued by an institution of finance, usually, one that is a bank. It lets the cardholder borrow money from the institution. Cardholders are required to repay the loan with interest following the terms of the institution. Cards for credit are offered in different types: 1

  • Basic cards provide an account to users who use them for purchases, balance transfers, or cash advances, and they usually do not have an annual fee.
  • Premium cards provide perks like concierge services, access to airport lounges as well as access to special occasions, and much more. However, they generally come with higher annual costs.
  • Credit cards give customers travel points, cash back, or other benefits according to how much they spend their money.
  • Credit cards for balance transfers come with low initial interest rates as well as fees for balance transfers made from an additional credit card.
  • Credit cards that are secured will require an initial payment that is kept in the hands of the card issuer to serve as collateral.
  • Charge cards don’t have a set spending limit. However they typically don’t let unpaid balances carry over from month to month.
Debit card vs credit card

What Is a Debit Card?

Debit cards are card that accepts payments through the direct debiting of funds from the consumer’s bank account, not a the loan of a bank. Debit cards are a convenient alternative to the hassle of credit cards as well as numerous of the same protections for consumers provided by the major processors like Visa and Mastercard. 7

There are two kinds of debit cards that don’t require the user to have a savings or checking account, in addition to one standard type.

  • Credit cards with a standard design draw funds from an account at your bank.
  • Federal and state governments issue the HTML0-based electronic benefit transfer (EBT) Cards to permit eligible users to use their benefits to purchase items. 8
  • Credit cards for prepaymentgive those who do not have access to an account at a bank to purchase electronic goods up to the amount preloaded on the card.

The most shrewd consumers might prefer debit cards since there are typically charges unless you spend more than what they have on their account and are charged an overdraft charge. (The fee-free option is not the case for debit cards that are prepaid, as they often charge activation and use fees, as well as other fees.) In contrast, credit cards typically have monthly fees and over-limit charges and late payment charges, as well as a myriad of other penalties along with the monthly interest charged on the balance on the card.

Pros and Cons of Debit Cards and Credit Cards

Once you’ve figured out the most fundamental aspects of how the debit card is different from that of a credit card, we’ll take a look at their advantages and disadvantages.

Debit Cards


There isn’t any debt to pay since you’re making funds that you own.

It’s less expensive to purchase because there are no charges for interest.

Also serves also as an ATM credit card well, meaning you are able to use it to withdraw cash from an ATM.

Approval of debit cards is much easier and quicker.

It doesn’t help to build credit history.


It is not possible to keep cash that is disposable in your account because it is debited directly.

It could be difficult to balance your account at the end of the month if you aren’t keeping the track of your expenses.

There is a possibility of being subject to a charge if you withdraw funds from a different ATM.

There isn’t much protection in the case of the fraud of debit cards.

Credit Cards


Credit cards are very convenient and save you from carrying cash around on your person.

Credit cards can help you improve your credit scores.

The reward you receive is more than the rewards you earn on debit cards.

They allow you to be flexible in spending because they have very large credit limits.


If you fail to pay your bills in time or at all, you’ll be penalized with a substantial amount of interest.

Credit cards are subject to numerous charges.

A missed payment (even because of legitimate motives) can end up negatively impacting the credit rating. It is then necessary to work more to improve it.

Even though there’s a credit limit but you can be attracted to spend more than you’re able to afford. This can lead to credit card debt.

So, Which One is Better?

As you can observe, credit cards and debit cards have each of their advantages and drawbacks.

Here are a few scenarios in which you could make use of a credit card or a debit card based on their advantages and disadvantages.

If you are experiencing problems with spending: Credit card

It’s a given when you aren’t in control of the amount you spend, it is best to use debit cards. Since the money is coming out of your savings or the current account, you’re less likely to go overboard and end up in the debt of a credit card.

Cash withdrawal Credit card

If you make a withdrawal using the credit card you’re getting access to your personal funds, which means there’s no cost. If you do use the credit card you have to use for withdrawing funds you’re merely withdrawing amount you don’t have. The bank will view it as a loan, which you’ll be required to repay at a an interest rate that is high.

Making transactions or shopping online Credit card

Credit cards are the most secure choice when shopping online. If you suspect fraud, you’re able to contact your bank and have them remove your card. In addition, having an money reversed from your credit card is much simpler than using the debit card.

To make a major-ticket purchase A credit card

Credit cards provide the ease of splitting purchases into EMIs. This is a great option for big-ticket purchases as they can be less expensive.

For a trip credit card

The majority of credit cards are universally accepted. This means that you can utilize credit cards while you’re abroad and not worry about carrying cash in foreign currency. Keep in mind that if you swipe your card in foreign countries and you are assessed a mark-up for foreign currency cost.

Although there are many similarities between debit and credit card however, there are a lot of differences also. Therefore, it is recommended to conduct thorough research in order to make the best choice based upon your immediate and long-term needs, select one or the other.