Is it better to pay with a credit card or a debit card?

Posted by

Think about the number of members in your family who have a debit card as compared to the number of family members who have the best credit cards In India. The gap between the two might shock you, but the same is the case with many Indians, and the simple reason being, the fear from the word credit. But, is paying with a debit card actually better than a credit card? Come let’s find out.

Debit Card VS Credit Card

There are several advantages and disadvantages of using credit and a debit card, to make it simple for you, we bring to you the 5 most relevant differences which will help you make the right decision:

  1. Meaning 

  • Debit Card: Debit card is one of the facilities offered by banks and financial institutions to its customers, in which a customer can make payments directly from his/her checking account by using a payment card. It is a thin, rectangular-shaped card made up of plastic or metal.
  • Credit Card: Credit card is one of the facilities offered by banks and financial institutions, that allows its users to borrow interest-free credit up to the pre-specified limit for 45-60 days, to make payments. It is a thin rectangular-shaped card made up of plastic or metal.


2. Convenience in usage

  • Debit Card: You pay for your purchase, the amount is directly taken out from your bank account, hence, you can only spend up to the cash available in your savings or current account. There is no bill or statement.
  • Credit Card: The credit card company pays for your purchases, no amount is taken out from your account, you can spend up to a pre-specified credit limit, without worrying about how much cash is available in your current or savings account. Bill or statement is issued to you each month with details of the transactions you have made, which need to be made each month.

3. Cost to the user (Interest and maintenance charges)

  • Debit Card: No interest is charged on the payments made by using a debit card. However, charges like annual fees and PIN registration fees are charged from the user.
  • Credit Card: If the outstanding amount is not paid before the due date, a high-interest rate is charged monthly on the amount outstanding which is much higher than a personal loan. Also, credit card users have to pay multiple fees like late payment fees, annual fees, joining fees, etc.

4. Safety

  • Debit Card: Safety features like SMS, OTP pin notifications are offered by the card issuers along with minimal protection in case the card is lost or stolen. Also, the liability in case of a fraudulent transaction is only transferred to the card issuer if the transaction is reported immediately. Hence, when compared to credit cards, debit cards are less safe. 
  • Credit Card: Safety features like SMS, OTP pin notifications are offered by the card issuers along with 100% protection in case a card is lost or stolen. Also, if a cardholder reports a fraudulent transaction within 48 hours when such transaction has occurred the liability is transferred to the card issuer. Hence, when compared to debit cards, credit cards are much safer.

5. Rewards and benefits (credit score, cashback, reward points, etc.)

  • Debit Card: Using a debit card does not affect your credit score. Also, debit cards offer no rewards to their users mostly, only some debit cards offer rewards such as cashback and reward points, etc. depending upon the card issuer and the type of debit card a consumer uses. 
  • Credit Card: Using a credit card in a financially disciplined manner helps you build a good credit score, helping you to secure loans easily from banks and financial institutions in the future and vice versa. Many credit cards offer cashback and reward points which can be redeemed later to make payments. Also, some credit cards offer numerous privileges in retail, travel, dining, etc. 

In the above article, we have discussed the key differences between credit and debit cards, where on one side the cost of usage of debit cards is less than credit cards, on the other credit cards are much safer to use than debit cards, making credit cards and debit cards both an attractive option to invest in, depending upon the preferences and habits of the user. So, now you know why some majority of your family owns a debit card, whereas only some own a credit card. So, now it’s the perfect time for you to decide which one you find better, a credit or a debit card, and start your journey of enjoying the benefits of being a smart cardholder.

Leave a Reply