Credit Card vs Debit Card – When to use them?


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India is fast moving towards a digital economy, and many citizens have begun transacting using digital modes of payments. When it comes to digital payments, there are many options available like a credit card, debit card, net banking, mobile wallet, mobile banking and so on.

While there are several payment options available, but many people are not aware of when to use a debit card and when to go for a credit card.

Here we will discuss when you need to use them.

  1. Based on your behaviour

If you are a kind of person who spends money unnecessarily and buys whatever you feel like buying without a second thought, a debit card would be a better option. However, through a debit card, you can spend only as much as you have in your savings bank account. While, in case of a credit card, you spend now and pay later. Though, if you are self-confident that you can use the card carefully and pay off monthly bills on time.

  1. Rewards and benefits

Banks do not offer various rewards on the debit card when compared to a credit card. You will not be given any reward points for doing day to day transactions using the debit card. But in the case of credit cards, banks offer many rewards and benefits to promote regular use. There will be many benefits like reward points, loyalty programs, cash-backs, discounts on shopping, travelling and many more. In case you are looking for benefits and rewards, you can choose credit card as a mode of payment.

  1. Based on the type of purchase

You can use the debit card to make payments in general provision stores or small shops.  A credit card can be used for making large investments so that a lot of money is not debited from your savings bank account at one go. You can use the credit cards during overseas vacations as many countries accept only credit cards for bookings.

  1. Protection against frauds and scams

It is safe to use both credit and debit cards in India if you are aware of how to use them and know how frauds are committed. Moreover, two-factor authentication is needed to validate any transactions that take place with your card. The main drawback, if you are subject to fraud vis-a-vis debit cards, is, fraudsters can empty the bank account before you have a chance to report the fraud to your bank. In the case of credit card fraud, you can ask the issue with the credit card issuer and get appropriate reversals, before you receive your credit card bill.

Actually, both debit and credit cards have their benefits, but in the case of a credit card, if you do not use it carefully, there are possibilities of ending in a debt trap. You must pay credit card bills on time. In case, if you miss paying credit card bills on time, your credit score will be affected, and you must also pay interest on the outstanding amount.

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Credit Card vs Debit Card – When to use them?

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