HomePersonal FinanceCredit card or debit card It’s your choice

Credit card or debit card It’s your choice

Many of us regularly get calls /e-mail offers from banks appealing to us to take a credit card. Bank in which you hold your account might have given you ATM (Any Time Money) cum debit card & told you that it is convenient to use a debit card for shopping.

Now confusion begins you already have a debit card and the bank is calling you for taking a credit card saying that a credit card is most convenient for shopping. For those of you who are confused like this, here are the pros and cons of using credit and debit cards.

While credit cards and debit cards look the same as plastic cards (seem similar) but they are totally different in the way they work and the services they offer. In this article, we will cover the advantages and disadvantages of each which will help you to pick your choice credit card or debit card.

credit card debit card

Debit Card

The word debit means deduction and, your debit cards behave in the same manner as per name and deduct money immediately from your account as and when you use that for purchasing goods.

Advantages of Debit Card

  1. You need not carry hard cash for shopping.
  2. It takes a shorter time to complete a purchase since one doesn’t have to wait for a check to get approved. Further, you wouldn’t have to carry a checkbook, traveler’s check, etc.
  3. You can use a debit card as an ATM card and withdraw money from the ATM machine.
  4. You will not end up spending extra money as you will be allowed to make over-draft payments.
  5. You need not to pay any interest and penalties or any additional fees.
  6. You will get money anytime (24 x 7) you need from the nearest ATM center.
  7. No need to visit a bank, stand in queues, or wait for check clearing for withdrawal of money.
  8. Need not remember payment dues after purchase.

Disadvantages of Debit Card

  1. You will not get any credit.
  2. If you happen to be at a place that doesn’t take a debit card you cannot do shopping with a debit card.
  3. If you use this ATM card at another bank ATM machine you have to pay an additional charge to the bank.
  4. Fraud may happen if you use a debit card for online shopping and your debit card number, security code, and expiration date goes into the wrong hand.
  5. Money taken/deducted from your account instantly no grace period will be given.
  6. Mostly all credit cards come with some additional services like insurance or cashback etc. Debit card does not offer that.
  7. You have to track your spending you will not get any statements as you get on the credit card.
  8. In case of purchase, goods are faulty or you had disputes like this you will be in a weaker position as you have already made payment through a debit card.
  9. You will not gain a credit score as transactions made by debit card are not reported/given to other companies/credit agencies etc.

Credit Card

As the name suggests it is credit provided to you for making a purchase. A credit card allows you to do shopping on credit meaning you are borrowing money while doing shopping, this money will not be debited directly from your account like a debit card. Mostly by month, you will get a bill of the sum of items purchased by you.

You can make payment in full or in part, if you choose to make payment at a later stage you will be charged with interest amount.

Advantages of Credit Card

  1. You need not carry hard cash for shopping & it is not necessary to have a bank balance in your account for making purchases.
  2. You can purchase goods today but the actual payment will be done by you later. (At your convince)
  3. It will act as a blessing if you want to purchase some items which are beyond your budget but still, you need that.
  4. You will get benefits given by the bank about cash back, free insurance, reward points, etc.
  5. Mostly accepted at all places hence shopping will be joy.
  6.  You can make full/part payments at your convenience.
  7. You can keep your records up to date as you will receive consolidated credit card statements every month.
  1. You can withhold payment of merchandise in case of the product purchased by you is faulty/defective.
  2. Some credit cards also provide the facility to withdraw money from ATMs.

Disadvantages of Credit card

  1. You have to remember the payment due date, you will be liable to pay a penalty / more interest rate on slippage of this date.
  2. You may end up spending more amount, which you may not afford in short card encourage you in making a purchase of goods/service which you really can’t afford.
  3. Your shopping will become more expensive as interest rates are high and there may be additional hidden costs.
  4. Lost/Stolen cards may result in unwanted expenses and a lot of inconveniences.
  5. Extensive use of Credit card increases your debt and affect your finances adversely.
  6. Apart from Interest, some bank keeps additional charges so, you need to be careful & understand the terms and condition before taking a credit card.
  7. Purchasing things on credit may become a habit that will be dangerous.

Indeed, irresponsible credit card use can result in many debts and other bills. So, if you’re struggling to repay your debts, credit card debt consolidation can be a great financial solution. This way, you’ll enjoy a lower interest rate, more flexible terms, and smaller monthly payments. To avail of a debt consolidation process and look forward to financial freedom, work with professionals specializing in credit card debt settlement.  

On the other hand, there are additional things that you should keep in mind when dealing with a credit card. For instance, a wise thing is to understand terms and conditions you should know whether there are any annual fees or other fees for specific transactions. Also, make sure you know the policies and fees for using your debit card at ATMs belonging to other banks. You should report the loss /damage of the card immediately to stop unauthorized usage.

Factors To Consider When Choosing Between A Credit And A Debit Card  

Now that you know the advantages and disadvantages of a credit and a debit card, it’s time to familiarize yourself with a number of factors for choosing which will work best for your personal needs. These can include: 

  • Spending Habits: If you tend to overspend, having a credit card may not be an excellent option because it’s easy to spend more money when it’s not your own money. As such, a debit card may be a better option since it’ll limit your spending on the money you have in your bank account.  
  • Credit History: If you have a poor credit history, you may have to pay a higher interest rate on a credit card. This makes a debit card a better choice as you don’t need to worry about interest rates. But if you have a good credit history, you can qualify for a credit card with a lower interest rate. This can help you save money if you carry a balance from month to month with interest charges.  

Other factors that you need to keep in mind include safety, financial goals, and the like.

Conclusion: – In the current scenario Debit card facility is a must for all but you have to make a choice to take a credit card or not, Credit card use wisely within the limit is a boon, but overuse lead to several financial implications.


1. Can I use a credit card and a debit card interchangeably?

No, Credit cards and debit cards function in unique ways and have specific characteristics and purposes. Even though both types of cards can be used for buying things, they have distinct payment methods and financial consequences.

2. Will using a credit card negatively impact my credit score?

Using a credit card responsibly can actually help improve your credit score by demonstrating your ability to manage credit responsibly. However, missing payments or carrying high balances can have a negative impact on your credit score.

3. Are there any fees associated with using a debit card?

Although debit cards generally have lower fees compared to credit cards, some banks might still impose fees for specific transactions or services like overdrafts or using out-of-network ATMs. It is important to go over the terms and conditions of your account in order to be fully aware of the possible charges that may come with using your debit card.

4. What should I do if my credit or debit card is lost or stolen?

If you lose your credit or debit card, it is very important to quickly inform your card issuer or bank. They have the ability to disable the card to stop unauthorized usage and provide you with a new card as a replacement.

5. How can I monitor my credit card or debit card activity for fraudulent transactions?

Mostly all banks and credit card companies provide online or mobile banking options that allow you to track your account activity instantly. Establish transaction notifications and consistently monitor your statements for any unfamiliar or unauthorized fees. If you believe there is fraudulent activity, get in touch with your bank or card issuer right away to report it.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money.