What is Difference between Debit Card and Credit Card?

Cards are essence of today. You can travel without money but you can’t move out of home without card. Cards are again divided into two categories, Debit Card and Credit Card. The differences between a debit card and a credit card are more than you can think of. Even though both cards often look the same, have many similar functions. Debit and credit cards are two of the most commonly used payment cards in the world. They both have a series of numbers embossed or printed along with the cardholder’s name on the top. Each has a magnetic stripe on the back, a special security code, and an embedded microchip on the front that encrypts key personal and financial information related to the cardholder and the related account(s).

Major difference is that with a credit card, the bank lends you money to use which you can use and pay them back with interest on a monthly basis or 50 days cycle. Whereas, with the debit card, you are spending the money which you already have. You probably have at least one credit card and one debit card in your wallet. The convenience and protection that they offer are hard to beat, but they have important differences that could substantially affect your pocketbook. Here’s how to decide which one to use to meet your spending needs.

What Is a Debit Card?
A debit card is a payment card that makes payments by deducting money directly from a consumer’s saving account, rather than on-loan book from a bank or card issuer. Debit cards offer the convenience of credit cards and many of the same consumer protections when issued by major payment processors such as RuPay, Visa or Mastercard. There are two types of debit cards that do not require the customer to have a checking or savings account, as well as one standard type.

What is Credit Card?
A credit card is a card issued by a financial institution, typically a bank, and it enables the cardholder to borrow funds from that institution. Cardholders agree to pay the money back with interest, according to the institution’s terms. Credit cards are issued in the following variety of categories:

Standard cards simply extend a line of credit to their users for making purchases, balance transfers, and/or cash advances, and they often have no annual fee.

Premium cards offer perks such as concierge services, airport lounge access, special event access, and more, but they usually have higher annual fees.

Rewards cards offer cash back, travel points, or other benefits to customers based on how they spend.

Balance transfer cards have low introductory interest rates and fees on balance transfers from another credit card.

Secured credit cards require an initial cash deposit that is held by the issuer as collateral.

Charge cards have no preset spending limit but often don’t allow unpaid balances to carry over from month to month.

black payment terminal
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Pros and Cons of Debit Cards and Credit Cards

Now that you know the fundamental ways in which debit cards differ from credit cards, let’s look at their pros and cons.

Debit Cards


  • There is no debt involved since you are using your own money.
  • It is cheaper to use since there are no interest charges involved.
  • Serves as an ATM card as well, so you can use it to withdraw money from an ATM.
  • Approval for a debit card is easier and faster.
  • Doesn’t help build a credit history.


  • You don’t have the ability to leave disposable cash in your account since money is directly debited.
  • It can complicate balancing your passbook at the end of the month if you don’t keep track of your spending.
  • You may be charged a fee if you withdraw money from a different bank ATM.
  • There is very little protection when it comes to debit card fraud.

Credit Cards


  • Credit cards are extremely convenient and prevent you from having to carry cash with you.
  • Credit cards help you build your credit score.
  • The rewards you earn are much higher than those on debit cards.
  • They provide you with flexibility when it comes to spending since they come with relatively high credit limits.


  • If you don’t pay your bills on time or in full, you are charged a high rate of interest.
  • Credit cards have multiple fees.
  • Missing a payment (even due to genuine reasons) could end up adversely affecting your credit score. You then must work much harder to build it.
  • While there is a credit limit, you could always be tempted to spend more than what you have. This leads to debt.

Key Differences
You can’t use your debit card if your bank account is empty (unless you sign up for overdraft protection), but you can use a credit card. When you use a debit card, the money is automatically taken out of your checking account. When you use a credit card, you pay the bill later. Keep in mind, though, that credit cards can help you build up your credit. Or they can hurt it if you don’t use them responsibly. Debit cards, though, won’t impact your credit score. A debit card is simply a tool to use in place of a check or actual cash. When you use a debit card, you are using your funds but you are borrowing money from your card issuer when you use a credit card. But there isn’t necessarily a better card to use. Using credit versus using a debit card, which is essentially cash, depends on how you want to spend and manage your money.


  • Debit and credit cards allow cardholders to withdraw cash and make purchases.
  • Credit cards give you access to a line of credit issued by a bank, while debit cards deduct money directly from your bank account.
  • Credit cards offer better consumer protections against fraud compared with debit cards linked to a bank account.
  • Newer debit cards offer more credit card-like protection, while many credit cards no longer charge annual fees.
  • Debit card users can only spend the money available in their bank account unless they have overdraft protection.
  • When comparing credit cards with debit cards linked to a bank account, it’s important to consider the fees and benefits.

FAQs on Credit and Debit Cards

Is a Credit Card safer than a Debit Card?

In most cases, yes. If someone steals your debit card, they have direct access to the cash in your accounts. If someone steals your credit card, you don’t lose actual money from your checking or savings account. Banks will freeze your account when you report a debit or credit card stolen. But the impact will be greater if your credit card is stolen or used by someone else.

Can I Use a Credit Card as a Debit Card?

You can use your credit card at an ATM to take out a cash advance from your line of credit. However, most credit cards come with high fees for taking what is, in essence, a short-term loan from your creditor. If you need cash, it may be more prudent to use your debit card.

So, Which One is Better?

As you can see, credit cards and debit cards come with their own advantages and disadvantages. However, here are some of the instances where you can choose to use a credit cards, or a debit based on their pros and cons.

  • If you have spending issues – Debit card. It goes without saying that if you can’t control how much you spend, to use a debit card. Since the money is going from your savings or current account, you are less likely to overspend and get into credit card debt.
  • Withdraw cash – Debit card When you withdraw money using your debit card, you are gaining access to your own money so there is no expense involved. However, if you use your credit card to withdraw money, you are withdrawing the money you don’t have. The bank will consider this as a type of loan which you will have to pay back with a high rate of interest.
  • Shopping or making transactions online – Credit card: Credit cards are your safest option while shopping online. If you detect fraud, you can always call your bank and block your card. Moreover, getting an amount reversed to your credit card is far easier than with a debit card.
  • To make a big-ticket purchase – Credit card: Credit cards offer you the convenience of being able to split transactions into EMIs. This makes it a good option to make big-ticket purchases since they become more affordable.
  • For a vacation – Credit card: Most credit cards are universally accepted. So, you can use a credit card when you are overseas and not have to worry about having foreign currency in hand. Do, however, keep in mind that when you swipe your card overseas, you will be charged a foreign currency mark-up fee.

Even though there are many similarities between a debit and credit cards, there are many differences as well. Hence it is advised to research adequately and based on your short-term and long-term requirement, choose between the two.

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