Credit Cards VS. Debit Cards

Credit cards and debit cards serve the same purpose, they provide a convenient way to pay for things if you don’t have cash in hand, and almost every place you go will accept this method of payment. They also can be used for all kinds of online purchases.

If you look at a credit card or a debit card, you will notice they are identical. They both showcase the card holder’s name, a card number consisting of 16 digits, the card’s expiration date, and of course, a magnetic strip and an EMV chip.

Although they have the same goal, debit and credit cards have more differences than similarities. The main difference lies in how funds are drawn from your bank account.

In this article we will explain how they work, their pros, and which one to choose.

What Is a Credit Card?

A credit card is issued by a bank allowing its holders to borrow money rather than withdraw money from their checking account. The cardholder is obliged to return the borrowed amount with interest. The interest is determined by the bank based on the terms agreed upon with their client. Simply put, credit cards are more like loans.

Credit cards have many types; the standard one grants the holder a borrowing limit (line of credit) and normally has no annual fees. For more features and benefits, you can apply for a premium credit card that offers perks like access to airport lounges, but this type comes with a higher annual fee. There are also reward cards offering cashback, reward points that can be redeemed for travel miles, discounts and offers, and other rewards.

Those are the most common ones. You can also apply for balance transfer cards, secured credit cards, and charge cards.

What Do You Get When Using a Credit Card? 

There are many pros you get when you use a credit card to make payments, including:

Build Your Credit History

Your credit history depends on how liable you are in paying your debts. On-time payments and low credit utilization ratios can help you build a good credit history. But why is credit history important? Your credit history is one of the first things a financial institution would look at if you applied for any kind of loan. Paying using a credit card can help you get the loan you need.

Warranty on Purchased Items

Not all, but some credit cards offer purchase protection and insurance on items you buy using your credit card. This differs from the warranty you get from the manufacturer. Sometimes it covers the product even after the manufacturer’s warranty expires.

Again, not all banks offer that kind of insurance on purchased items; you need to check with your bank beforehand.

Facilitating Your Purchases

How can a credit card facilitate your purchases? By offering an easier and more convenient way to pay. Some banks will give the option to split your retail payments into installments, giving you the chance to pay for your big purchases in a more and less budget-breaking way.

What Is a Debit Card? 

Just like credit cards, you will use your debit card to make payments in-store and online, but the difference here is how the money is deducted. With debit cards, your payments will be directly deducted from your checking account.

 What Do You Get When Using a Debit Card?

Choosing a debit card over a credit card has its benefits, the benefits include:

Avoiding Debt

It is simple, with debit cards, you spend the money you have. Considering this you will avoid going on unresponsible shopping sprees and piling up debts.

You Don’t Have to Pay Fees 

Usually, there are no fees related to debit cards, unless your expenditures exceeded the amount available in your bank account. On the other hand, a bank can charge a lot of fees for credit cards such as over-limit fees and more. That’s in addition to the interest.

Additional Benefits

Just like a credit card, paying through your bank debit card to make certain purchases, whether online or in-store, will grant you some discounts and offers.  

Which One to Choose

Both options have their perks; the determining factors here are your preferences and financial needs. If you tend to go on wild shopping and spending journeys, then maybe you should go for a debit card to avoid stacking up debts. But if you are planning to apply for a loan in the future or you’re someone who enjoys being rewarded for the purchases you make, then choose a credit card.


Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.