Credit Card vs Debit Card: Differences, Pros & Cons

Credit Card vs Debit Card

It is essential to know about the basic functions and features of a debit card and credit card to decide which one is best for you. Both these cards are used for carrying the money digitally and the most convenient method of payment for both online and in-store purchase. 

Debit Cards allow you to spend and withdraw money from your own account. The money that you have already saved up or deposited. Credit Cards will also allow you to spend and withdraw money borrowed from the bank, given the condition to be paid at a due date with additional charges and interests.

Let us find out more on the major differences between debit cards and credit cards. I will also discuss the pros and cons of using a debit card or credit card. So, let’s start our in depth discussion on credit card vs debit card:

7 Key Differences Between Credit Card And Debit Card:

Here, I point out the 7 key differences between credit and debit card with the proper explanation:

1. Funds:

Debit card’s funds are generated straight from your account. On the other hand, credit card’s money is borrowed from the issuer or bank as a loan for your purchase.

2. Purchasing Power:

If you pay off or complete your transaction with your debit card, it means that you have the power of purchase and the amount is deducted straight from your current account. Paying off with your credit card means the issuer or bank is completing your transaction or payment. 

3. Limitations:

Debit card purchases are made according to the limit or amount on a user’s current account. If you use credit cards, you can exceed your limit and spend as much as you want according to your credit limit.

4. Additional Fee:

You do not have to pay any extra fees for your debit card purchase as the money is instantly deducted from your bank account. For using credit cards an additional fee needs to be paid on a monthly basis to keep using the service.

However, an annual fee is charged for using both credit card and debit card. There are many hidden charges of using credit cards like renewal fees, pin replacement, credit card cheque issuing etc.

5. Interest Rates:

There is no interest rate for using a debit card. One of the reasons why many prefer this over credit cards. There is a charge based on the total outstanding for credit card users. The debt or borrowed amount needs to be paid in due time to avoid paying interests.

6. Rewards:

You will not get many rewards and extra benefits from using a debit card as you are using your own money for purchasing goods and services. Credit card will give you a lot of bonuses and rewards. You will get many fringe benefits using your credit cards in a restaurant, stores, while traveling etc.

7. Security From The Issuer:

If your debit card is lost or stolen the issuer will cooperate and compensate a very little amount as transactions are made straight from your account. On the other hand, the issuer will provide you with 100% protection and prevent you from fraudulent activities. 

Credit Card vs. Debit Card: Pros And Cons Of Each

There are many benefits and restrictions of using both debit cards and credit cards. The pros and cons of using credit cards and debit cards are given below one by one in a table format for your better understanding.

Let’s see the pros and cons of credit cards first:

Pros Of Credit CardCons of Credit Card 
Convenience of carrying the money digitallyIssuers will charge an additional Fee and higher Interest Rates are charged if the borrowed amount is not paid in due time.
Scope to increase your credit score for future facilitiesFailing to pay in due time can hamper your credit score, which takes many years to build and grow.
Protection from fraudulence Overspending can lead to huge debts.
More Rewards and BonusesIdentity theft or fraudulent charges 
Credit Limits Can Be Exceeded While ShoppingExtra Hidden charges apart from the interest rates.

Now, check the pros and cons of debit cards:

Pros Of Debit CardCons Of Debit Card
Zero risk of falling into debts as the user is always paying the money directly from the current accountIssuer’s give very less compensation for theft or damage of your card and provide very less security from fraudulent activities.
There are no additional fees or interest rates for using debit cardsThere are not much rewards or bonuses 
Instant deduction of cash from the account helps the user to stay aware and responsible for their expenditureVery Complex procedure of balancing your account if the transactions are not recorded properly
Withdrawing cash is comparatively easier and can be used in ATM machines tooAn extra fee is charged withdrawing money from the ATM booths.
No hidden charges or annual fee is requiredNo credit score is built for future facilities 

Credit Cards vs. Debit Cards: Which Is The Best For You?

It all depends on the type of person you are and your tendency of spending money. If you are a big spender and use your money unnecessarily, then it is highly recommended to go for the debit cards.

If you are too involved in online purchases, then go for the credit cards and earn credit scores for future benefits from the issuers.However, it is better to keep both the cards for different uses and purposes.

Can You Transfer The Amount Of Credit Card To Other Accounts?

Yes, some of the issuers will allow you to transfer a certain amount from  your credit card to another account.

In that case, an extra amount or additional fee will be charged or some issuer will charge cash in advance for such transactions to take place.  You must have a pin number to transfer any amount from your credit card to other accounts.

Is It possible To Use The Debit Card As A Credit Card?

You can never use your debit card as a credit card, because the digital money you are spending using your debit card is deducted instantly from your bank account. The issuer will never lend you any money or allow you any sort of credit purchase with your debit card.


It is wise to know the basic differences before you apply for a debit card or a credit card. Both the cards are good for carrying digital money and it is your responsibility to figure out the right one for you.

If you find this article useful or have any queries, feel free to write down below in the comments section. And always be careful when use your credit card or debit card.

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