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Debit Vs Credit Card

Last modified: Jul 25, 2023

When it comes to plastic money, there are two main types of cards: debit and credit cards. But how do they differ? Here, we will explore the differences between the two and help you decide which type of card fits you best.

Debit vs Credit Card

What Is a Debit Card? 

A debit card is a payment card that automatically deducts money from the customer's checking account. They resemble credit cards, notably when issued by Visa or Mastercard, the two major payment processors. 

What’s great about these debit cards is that customers can withdraw money from ATMs. Another thing to note about debit cards is that some of them allow an overdraft, meaning you can spend more money than what you have on your card, but you’ll be charged interest, of course. 

There are several types of debit cards that do not require the user to have a checking or savings account or one standard type. 

  • Standard debit cards: these cards draw on your bank account.
  • Electronic benefits transfer cards: these specific cards are issued by state and government agencies.
  • Prepaid debit cards: these are probably the most commonly used debit cards. You can make electronic purchases until reaching the preloaded amount. 

Every debit card has its advantages and disadvantages. Let’s look at some of the advantages debit cards offer:

Avoid Debt

When talking about a credit card vs debit card, you need to know that debit cards use the money you already have there. They do not draw money from any financial institution, so getting in debt is almost impossible. If you are an impulsive spender, then having a debit card should be your go-to option because you’ll stick to your budget and keep yourself out of high-interest debts. 

No Annual Fee

The main pro is that debit cards do not charge the user an annual fee. You can also withdraw money from an ATM without paying a fee. 

Protection Against Fraud

Nowadays, you can report fraud or any fraudulent activities on your debit card, especially on Mastercard or Visa. 

The moment you realize your debit card is missing or you want to report fraudulent activity, act fast! The longer you wait, the more difficult it becomes to persuade a bank that you were a victim of fraud. As a result, you may be held responsible for some or all the losses. 

Victims of identity theft are 43% more likely to live in an affluent suburb.


When talking about the difference between credit and debit, you need to be aware that the biggest disadvantages of debit cards are related to credit score.


Although debit cards do not charge users an annual fee, there are other fees that users may be subject to, such as:

  • Foreign ATM fees (if you withdraw money from another bank’s ATM)
  • Maintenance fees 
  • Overdraft fees 
Doesn’t Build Credit Score

A credit score demonstrates your financial capability to repay the money that you borrow. Unfortunately, using your debit card when making purchases or payments won’t help you build your credit score. Try using both credit and debit cards instead. 

No Rewards 

Another drawback is that debit cards don’t offer points, rewards, or cash back on purchases made with the debit card. Because rewards can save you money, this could be a dealbreaker for some. 

What Is a Credit Card?

When talking about a credit card vs debit card, you still need to know what a credit card is. 

A credit card is a card issued by banks or other financial institutions which allows the cardholder to withdraw money from that institution. Cardholders need to pay the money they borrow with interest.


Credit cards offer several advantages:

Helps Build Credit

Credit cards can help you build credit, but only if you use them responsibly. The responsible use of a credit card means making purchases that you can afford and paying your balance in full each month. If you're able to achieve this, you may strengthen your credit history and improve your credit score over time. 

Protection Against Fraud

Both credit and debit cards provide some fraud protection. If your credit card has been stolen or lost, you should notify your financial institution as soon as possible. You can also dispute charges on your credit card if you find them unauthorized. In case of any fraudulent activity, you can report it either by phone or email. 

No Savings or Checking Account

Credit cards are not linked to any savings or checking account. Therefore, there is little chance of experiencing fraudulent activities — a thief cannot access money in these accounts.

Additional Warranty or Insurance 

When talking about a debit vs credit card, you need to know that most credit cards offer purchases and warranty protections that are not available with debit cards. For example, if you make a purchase with your credit card and the item is damaged or stolen, you can usually file a claim with your credit card company to get a refund. 

Also, many credit card companies extend the manufacturer's warranty by an additional year. So, if you're planning on making a big purchase, using a credit card can give you some extra peace of mind.


Credit cards cannot go without drawbacks. Here are some of them: 

Affects Your Credit Score

The main difference between debit and credit is that your credit card impacts your credit score. But it really depends on how you use it. For example, if you only make the minimum payment each month, this will reflect negatively on your score. On the other hand, late paymentsexcessive usage, and maxing out one of your credit cards harm your credit score. But if you constantly pay off your balance in full and on time, your credit card could actually help improve your credit score. 

You Need to Pay the Money You Spend With Interest

Probably the biggest drawback of using a credit card is that you need to pay high-interest rates. And if you are not careful enough, these high-interest rates can drag you into debt. The reason why is that so is because when you make a purchase with your credit card, you're not spending your cash but the bank's money

Read more: How to Withdraw Cash From Your Credit Card Without a Pin?

Differences Between Debit and Credit Card

What's the difference between credit and debit, you might ask? While customers can make a withdrawal of their funds with both payment methods, they are not alike in any way.

A debit card is linked with your checking account, and you get to withdraw money from there. Credit cards are a bit different. Instead of withdrawing money from your checking account, you borrow money from the card issuer. 

Another key difference between debit and credit is fraud protection. Credit cards offer more consumer protection than debit cards. With debit cards, you need to report any fraudulent activities within a given time frame. Otherwise, you might need to cover the amount for the losses incurred. 

Benefits of Having a Debit and a Credit Card

These payment methods offer various benefits. Having both types of cards gives you more flexibility to make purchases in stores and online and build your credit score at the same time. If you use the cards responsibly, you can get a lot out of them. 

Lower interest rates on loans, smaller fees, or no fees at all, and building up your credit score are just a few of the benefits you can get from using credit and debit cards. 

Is a Credit Card Safer Than a Debit Card?

When used correctly, both credit cards and debit cards are quite safe. The best way to protect yourself against fraud is by keeping track of your card and reporting any suspicious activities immediately. 

But if we go in-depth, credit cards are a bit safer than debit ones. That’s because any fraudulent transaction made using your debit card results in funds being deducted directly from your bank account.

Bottom Line 

So there you have it! Our debit vs credit card article discussed two very different types of plastic cards that offer various benefits. Be sure to choose the right one for you based on your needs and how you plan to use it. 


Is a Credit Card Better Than a Debit Card?

It depends on your individual needs and how you plan to use the card. If you are looking for a way to build credit or take advantage of rewards programs, a credit card might be a better option. But if you want to avoid debt, then a debit card is your way to go.

Is It Safer to Use Credit or Debit?

If to compare a debit vs credit card, credit cards are a bit safer. That’s because any fraudulent transaction made using your debit card results in funds being deducted directly from your own bank account.

Is It OK to Use a Debit Card Online?

Yes, it is OK to use your debit card online. Just be sure that you are using a secure connection and that the website is legitimate before entering any personal information.

Are Credit Cards Safer?

Yes, credit cards are considered a safer option as it is not your money but your credit. The best way to protect yourself against fraud is by keeping track of your card and reporting any suspicious activities immediately.

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