Debit Or Credit Card, Which Is The Right One For You?

By Medha Roy Chowdhury | December 9, 2018

Debit and Credit Cards are your best pals in the age of digital transactions. Ever wondered which is the best for you? Let’s find out.

Today we live in a digital age. With technology having spread its wings over everything from buying groceries to getting food delivered, finance is not far behind. The use of plastic money is increasing due to the convenience it offers. With every passing day, the number of digital transactions is on the rise.

Credit Cards and Debit Cards have gained popularity as they are easy to use and eliminate the need to carry a fat wad of cash. Both these cards differ in terms of their features and advantages.

Confused between a Debit and Credit Card? Not sure which one to pick? Read on to know more.

Debit Card

You can get a Debit Card only if you have a Savings Account in your name. This card lets you access funds that you have accumulated in your account.

You can also use Debit Cards to make digital payments. Instead of paying cash, you simply hand over your card for payment. The payment amount is directly debited from your bank account after you key in the Personal Identification Number (PIN) to carry out a transaction. 

Why should you choose a Debit Card?

  • Your Debit Card can be used for a host of applications including booking tickets, making online purchases, and paying bills.
  • There is no need to worry about the late payment of fees or interest charges as you are using your own money.
  • It is impossible to fall into debt while using Debit Cards, as the highest amount you can spend is limited by your account balance.
  • Many digital-payment portals offer cashback and rewards on purchases made with Debit Cards.
  • You can enjoy quick and convenient ATM withdrawals using your Debit Cards.
  • A 128-bit encrypted security protects your Debit Card transactions, making it a safe and practical solution.

Credit Card

A Credit Card lets you purchase goods on credit. In this case, you need not have money in your bank account in order to spend. Your bank gives you a line of credit. When you pay using a Credit Card, the merchant checks your available line of credit and approves your purchase if the balance available is more than the purchase amount.

Whenever you make a timely payment of the outstanding amount, your credit worthiness, and consequently, your Credit Score goes up. Similarly, any delay or default in the payment, reduces your score.

Additional Reading: The Importance And Benefits Of A Good Credit Score

Your Credit Score is important as most lenders check out your score before approving your loan application. A high score will ensure the smooth processing of your loan application.

Additional Reading: What Can Hurt Your Credit Score? 

Why should you choose a Credit Card?

  • Using multiple Credit Cards and making full and timely payments of your Credit Card bills help you build a good Credit Score.
  • Most Credit Cards available in India are internationally accepted, thereby offering you global access.
  • The EMI conversion feature of Credit Cards allows users to convert purchases worth a substantial amount into easily payable monthly instalments.
  • Purchases made with Credit Cards reward you with points, cashback, fuel-surcharge waivers, free airport lounge access, free movie tickets, etc.
  • Some Credit Cards come with zero annual fee.
  • You have a world of options to choose from. Take your pick out of a range of Credit Cards that are exclusively meant for your shopping, travel, utilities, lifestyle, and entertainment needs.

Additional Reading: 3 Simple Ways To Improve Your Credit Score Before The End Of 2018

Should you use a Credit or Debit Card for high-value purchases?

If you are looking forward to purchasing a high-value item like an LCD TV or a refrigerator, both cards can be used.

With a Debit Card, you don’t have to worry about late payment, interest charges, and risks of default. But you must have the required balance in your account, failing which the transaction will be declined.

Additional Reading: 5 Ways To Protect Your Debit Card

While using a Credit Card, make sure you check that the amount to be paid does not exceed your credit limit. With a Credit Card, you can enjoy rewards for high-value purchases, a grace period for paying the bill, as well as the facility to convert the amount into EMI.

Additional Reading: 10 Credit Card Commandments You Ought To Follow

Should you have both?

Banks provide Debit Cards when you open a bank account. They may offer you a Credit Card too or you can apply for one at a later date. You can certainly have both, but remember to use a Credit Card sensibly.

Additional Reading: What Are The Pros & Cons Of A Credit Card Over A Debit Card?

If you can regulate your spending and have the capacity to pay the outstanding amount in full and on time, then Credit Cards can be a useful tool in the case of emergencies and for building an impeccable credit record.

If you’re on the lookout for loans and other financial products, go right ahead and explore your options!

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Category: Credit Cards Debit Cards
Medha Roy Chowdhury

About Medha Roy Chowdhury

Square peg in a round hole, Medha reads whenever she gets the chance to. She is happiest when travelling and dreads having to choose between the hills and the sea. Dog lover at heart, she is in pursuit of adopting a few canine friends someday. Weird as it may be, she bakes when stressed. Previously a Market Research Editor by profession, she takes a keen interest in finance. When she is not reading, you’re sure to find her with her ukulele.

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