Debit Card or Credit Card – Which One to Choose?

Debit cards and debit cards are both very commonly used nowadays. Both these seem almost identical as they have common features like a number with 16 digits, a special expiry date, identical chips, and EMV chips. Moreover, both these can be used to purchase commodities online as well as in some physical stores. They have one major difference: you’ve to deposit funds to your debit card to make transactions while having a credit card, you can lend money from the issuer up to a certain limit. 

In the modern age, almost every person has one debit card and one credit card in his wallet. Both these offer exceptional benefits, but it’s necessary to learn the key differences between them. Here is the major difference between a debit and a credit card. 

Debit Card

A debit card facilitates its users as they can use it to purchase something or make an online transaction. However, the amount is deducted directly from the consumer’s account rather than taking a loan from any bank. 

Advantages of Using a Debit Card

Here are some advantages associated with the use of a debit card. 

• No Debt

While using a debit card, the consumer uses money already deposited into a particular account. So, there is no risk of rising in debt. You can’t purchase any item that is crossing the amount on your debit card. This lowers the chances of risks that are associated with the credit card. 

• Protection From Fraud 

The debit cards are safer than the credit cards. A credit card may have theft or fraud issues that are almost zero in the case of a debit card. 

• No Annual Fee 

Unlike many credit cards, debit cards don’t feature an annual fee. Moreover, you don’t have to pay while withdrawing money. 

Disadvantages of Debit Card 

Here are some cons of using a debit card. 

• You shall receive no reward on your debit card. 
• It will not build your credit. 
• Some fees apply to the use of debit cards. 

Credit Card

Credit cards are mostly issued by some institutions and the borrower agrees to the terms of interest. Different categories of credit cards like standard, premium, reward type, and secured cards are there that have different terms and conditions. 

Advantages of Credit Card

Here are different benefits associated with using a credit card. 

• It keeps a transaction history. 
• Helps protect the warranty and purchases. 
• One can purchase things even in shortage of money. 

Disadvantages of Credit Card

Here are different disadvantages of using a credit card. 

• Spending leads to a remarkable debt. 
• The debt features high interest. 
• The loan affects the credit score badly. 
• The use of credit cards features high fees. 

Key Difference Between A Debit Card and a Credit Card

Here are the major differences between a credit card and a debit card. 

• A credit card offers the facility to lend the money to make different purchases while a debit card can be used just to make purchases via one’s amount. 
• Credit cards offer more security against fraud compared to debit cards. 
• Having a credit card means more debt and more interest while a debit card is not a source of any burden on finance. 

When choosing any of the debit and credit cards, it’s necessary to keep your financial risks in mind. If you can repay the lent money with higher interest, you can use a credit card. However, if you can’t manage to repay loans with interest avoid using a credit card and go for a debit card to save your funds. 

Conclusion

Each debit card and the credit card has exceptional benefits and disadvantages. So, they suit different users. We have discussed some of the benefits and cons of both these cards, you can decide which one to choose based on these advantages and disadvantages.