Debit Cards Or Credit Cards: What Should You Choose?

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Most of the transactions that we make today are with the help of debit cards or credit cards. The critical thing to note is that there is not one kind of debit card and not one kind of credit card. Every bank and financial institution offer different cards with different benefits/offers. But objectively, it is hard to determine if you should go with debit cards or credit cards. To understand which one is better for you, it is essential to understand their definition and differences.


Understanding Debit Cards and Credit Cards

One thing to note is that you can make purchases with both debit cards and credit cards, online or offline. The difference arises after you swipe the card and make a purchase. What happens after that is entirely different for both the cards. When you purchase with a debit card, the money is deducted from your bank account because the card is directly linked to your bank account (savings or current account). But credit cards are not linked to your bank account. With credit card purchases, no money will be deducted directly from your bank account when you make a purchase. You have the option of paying back the money before the due date or else you will have to pay the penalty charges as well.

Key Differences Between Debit Cards and Credit Cards

Basis Of Difference Debit Cards Credit Cards
Credit Limit There is no credit limit in debit cards. However, the bank may put up a daily purchase limit. Credit cards come with a credit limit. Your credit limit will depend on the kind of card you have. Also, your creditworthiness plays a huge role in determining your creditworthiness.
ATM Withdrawals There are usually no charges in a debit card for withdrawing money from ATM. However, if you are withdrawing money from an ATM which is not of your bank, then there is a limit of transactions in a month which go charge-free, after that you will be levied with a charge. Credit cards are not the best tools for withdrawing money from the ATM. There is a charge levied for withdrawing the cash from an ATM using a credit card and along with that, interest is charged on the amount you withdrew.
Interest There is never an interest levied on the transactions which you make from your debit card. After all, it is your money only. Credit cards come with a due date before which the customer must return to the bank what he owes. On the failure to do so, interest will be charged on the amount of balance due. Usually the cards with a 50-day interest-free credit. Ensure that you know the policy of your card.
Annual Fees Some of the private banks charge for issuing debit cards and their renewal. Apart from that, most of the banks usually give the debit card for free and there is no renewal charge as well. Credit cards with many benefits come with an annual fee and there are renewal charges as well. At the same time, there are credit cards which you can get for free as well but there might be a renewal fee from the next year.
Benefits You don’t have to pay back to the bank what you spent. You will have to pay back the amount spent to the bank.
No interest charge has to be paid. A certain percentage of interest has to be paid.
There are cash-backs and discounts. Many benefits including discounts and cash-backs.
Security Features Debits Cards are very secure, you will always be asked for an OTP for online transactions which only you will receive and will be notified of every transaction which takes place. Credit cards are similar to debit cards in terms of security features.


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Tanay hails from Bilaspur, Chattisgarh and is a sports and fitness enthusiast. Reading and writing is something which comes to him out of love for the web of magic that words can create.

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