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2-min read

Which is better: Credit Card or Debit Card

The best way to go about it is to do your research, plan your finances, take stock of your spending, and based on that figure out which works best for you: a credit card or a debit card.

Updated:May 3, 2019, 12:34 PM IST
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Which is better: Credit Card or Debit Card
The best way to go about it is to do your research, plan your finances, take stock of your spending, and based on that figure out which works best for you: a credit card or a debit card.
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With the advent of debit cards, people gradually stopped carrying around cash for every single thing. It’s more convenient, less troublesome, and safer. Then came credit cards, which became all the rage. And in today’s world, the number of people who don’t own both, a debit card as well as a credit card, is a very small quantity. If you are among the ones who own both, do you know the difference between the two, and where using either one of them is a better option? Here’s what you need to know.

Where’s the money coming from?

The most basic difference lies right in the words: debit and credit. While a debit card will withdraw money from your savings or checking account that you have with any bank, a credit card is a line of credit that will be provided to you by the card issuer. A debit card uses from the money you already have, and a credit card lends you money that you repay later.

Which is safer?

In terms of online security, both a debit and a credit card are equally vulnerable to online phishing scams and frauds. But along with ways of making both secure, there are also different processes which can help the user if a fraud is committed. In that case, a credit card is better protected than a debit, since the money siphoned off is not your own, but credit. Also, with a credit card, the user can always call up the issuer and file for fraud transactions. In case of a debit card, the money is already lost, which after a process and deemed legitimate, will be transferred back.

Which is more beneficial?

Most definitely a credit card, since they come with a lot of rewards, benefits, and perks. But wait. It also comes along with a caveat. You can reap the benefits of credit card rewards and points only if you are capable of paying off the monthly bills at the end of it. If not, the interest charged by the card issuer will render your rewards void, since you will anyway have to pay the interest.

Which is better?

While a credit card is more attractive since it allows you to make purchases you won’t be able to with your meagre means, the more frugal ones should definitely go with a debit card. With a debit card, there’s no fear of getting stuck in the debt cycle. You spend what you earn, and that’s it. So the answer to which is better, is based on the kind of financial decisions one is willing to make.

Which is more useful?

Both have their own usage areas. If the costs you incur are more day-to0day based and minimal, a debit card is the way to go. If your costs are higher, and include booking hotels, flights or expensive commodities, then a credit card would be more useful since it doesn’t cut out a chunk of your money at one go.

The best way to go about it is to do your research, plan your finances, take stock of your spending, and based on that figure out which works best for you: a credit card or a debit card.

To know more, click here.

This content has been created in association with YONO SBI.

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