Credit Card Vs Debit Card: What To Choose? Here's The Right Card For Your Spending Needs

Credit Card Vs Debit Card: Choosing between a credit card and a debit card depends on your spending habits, financial goals, and the benefits that matter most to you

Both credit and debit cards allow for convenient online or in-store purchases. However, the primary distinction lies in what occurs after you swipe the card

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Credit Card Vs Debit Card: With the rise of digital transactions, the choice between using a credit card or debit card can often leave consumers confused. Here we will understand the key differences between these two types of cards that help you decide which one to use, and when. Choosing between a credit card and a debit card depends on your spending habits, financial goals, and the benefits that matter most to you. Whether you prioritise rewards, convenience, or security, knowing the differences can help you make an informed decision.

The Basics: Credit vs. Debit Cards

Both credit and debit cards allow for convenient online or in-store purchases. However, the primary distinction lies in what occurs after you swipe the card.

Debit Cards: These are linked directly to your bank account. Any purchase you make results in an immediate deduction from your available funds.

Credit Cards: These work on a buy-now-pay-later basis. The bank extends you a line of credit, allowing you to make purchases with the agreement that you will repay the amount by a specified due date. Depending on the card, you may also enjoy additional perks.

Comparing Key Features

Credit Limit: Credit cards have a monthly limit, determined by your card type, your relationship with the bank, and your creditworthiness. Debit cards, on the other hand, can only be used up to the available balance in your bank account, though they may have daily spending limits.

ATM Withdrawals: With credit cards, withdrawing cash comes with fees and interest charges. Debit cards, especially when used at your bank’s ATMs, generally don’t incur withdrawal fees. Both cards typically have daily cash withdrawal limits.

Interest: Credit cards offer up to 50 days of interest-free credit, as long as you pay off the balance by the due date. With debit cards, since funds are taken directly from your account, no interest applies.

Annual Fees: Many credit cards come without an annual fee, though some specialised cards may charge one, which could be waived based on spending. Debit cards typically do not have annual or renewal fees.

Benefits and Perks: Credit cards often offer rewards such as cashbacks, discounts, and loyalty points, which can be redeemed for flights, gifts, or other bonuses. Debit cards also provide discounts and cashback, though generally with fewer reward options.

Usage: Both credit cards and debit cards can be used online and at physical stores. However, certain websites or transactions may only accept credit cards.

Eligibility: Getting a credit card requires meeting certain eligibility criteria, often based on income, existing bank relationships, and credit history. Obtaining a debit card is simpler, typically provided with a savings or current account.

Security: Both cards offer security features such as PINs, OTPs, and SMS alerts. Many credit cards also include zero-liability insurance for lost or stolen cards, which is not commonly offered for debit cards.