The Biggest Difference Between Debit and Credit Cards

There are numerous differences between a credit card and a debit card. Even though both cards frequently look the same, they serve many similar functions.

The main distinction is that with a credit card, the bank lends you money to use, which you then repay with interest every month. In contrast, when you use a debit card, you are spending money that you already have.

Difference Between Credit and Debit Cards

Parameters Debit card Credit card
DefinitionDeducts funds directly from your savings or current bank account.Allows you to borrow money to buy goods and services.
Source of fundsYour savings or current bank account.Your card issuer has extended your credit. It gives you access to funds that you would not otherwise have (like a very short-term loan).
Spending advantages You are limited to using the funds that you have.You can spend more than you have.
Who pays for the purchaseYou pay for your purchaseThe credit card company pays the vendor. You make your credit card payment to the company.
Fees There are annual fees as well as PIN regeneration fees.Multiple fees apply to credit cards. These include, among other things, joining fees, annual fees, late payment fees, and bounced cheque fees.
Limit to funds that can be accessedYou can withdraw any amount up to the amount currently available in your savings or current account.You can only use the card up to the credit limit that has been pre-set on your card.
RewardsTypically, the rewards are minimal.
You can get cashback, air miles, and reward points that can be redeemed.

The Benefits and Drawbacks of Credit and Debit Cards

Now that you understand the difference between credit card and debit card, let’s look at their advantages and disadvantages.

Advantages of Debit Cards

  • You are not in debt because you are using your own money.
  • Because there are no interest charges, it is less expensive to use.
  • It also functions as an ATM card, allowing you to withdraw money from an ATM.
  • Debit card approval is now simpler and faster.


  • Because money is debited directly from your account, you cannot leave spare cash in it.
  • If you don’t keep track of your spending, it can be not easy to balance your passbook at the end of the month.
  • If you withdraw money from a different bank’s ATM, you may be charged a fee.
  • When it comes to debit card fraud, there is very little protection.

Credit Card Advantages

  • Credit cards are extremely convenient because they eliminate the need to carry cash.
  • Your credit score can be raised with the use of credit cards.
  • You earn far more rewards than you would with a debit card.
  • They give you more spending flexibility because they have relatively high credit limits.


  • You will be charged a high-interest rate if you do not pay your bills on time or in full.
  • Credit cards charge a variety of fees.
  • Missing a payment (even for legitimate reasons) can hurt your credit score. You must then work much harder to construct it.

So, Which One Is Superior?

As you can see, credit cards and debit cards each have their own set of benefits and drawbacks.

However, here are some situations in which you can use a credit card or a debit card based on their benefits and drawbacks. If you have spending problems, use a debit card

  • It goes without saying that if you can’t control your spending, you should use a debit card. Because the funds are coming from your savings or checking account, you are less likely to overspend and incur credit card debt.
  • Cash Withdrawal: Debit card When you use your debit card to withdraw money, you are gaining access to your funds, so there is no cost involved. However, if you withdraw money with your credit card, you are withdrawing money that you do not have. The bank will view this as a type of loan that you must repay with a high-interest rate.
  • To Make A Large Purchase Credit Card: Credit cards provide the convenience of splitting transactions into EMIs. This makes it a good time to buy big-ticket items because they become more affordable.

Although debit and credit cards have many similarities, they also differ. As a result, it is recommended that you conduct adequate research and choose between the two based on your short-term and long-term requirements.


When you use a debit card, the amount of your purchase is almost immediately deducted from your checking account. When you use a credit card, the amount is charged to your credit line, which means the bill will be paid at a later date, giving you more time to pay.

It can be difficult to know when to use which cards. Consider using your debit card for everyday purchases because the funds are immediately deducted from your checking account. You could use your best credit card for larger purchases like a rental car or a hotel room to save money by reducing the amount of time you have to pay.

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