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How to Choose Between Credit Card and Debit Card? What’s the Difference?

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If you are faced with the dilemma of choosing a credit card or debit card there are a few things you will want to consider. Both of these pieces of plastic provide a different service and each has pros and cons associated with them. When you understand what each card has to offer you will be more likely to choose the one that is going to be most suitable for your needs.

The Debit Card

A debit card is directly linked to your bank account. In other words you can only use it for purchases up to the amount you have available in your account – you have no credit. As soon as you use your debit card the money will be shown as taken from your account. With some debit cards you may be able to take out more than you have in your account, but if this has not been agreed beforehand you could be heavily penalised for this.

Advantages of a Debit Card

  • It saves you from carrying money around with you so provides security as well as convenience.
  • You shouldn’t be able to fall into debt with a debit card as under normal circumstances you are just using the money you have in your account.
  • You can usually use your debit card to purchase items online.

Disadvantages of a Debit Card

  • If you don’t have an overdraft you might end up being charged high interest for taking out more money than you have in your account.
  • If you need money in an emergency you will usually be limited to the amount you have in your account (or the limit of your overdraft).
  • Some banks charge more for the use of debit cards then they do credit cards.

The Credit Card

The credit card is not tied to the amount you have in your bank account but instead the limit is determined by how much the lender trusts you for. Some people have impressive credit card limits that mean they could practically by a house with them.

Advantages of the Credit Card

  • If you need money in an emergency then the credit card is ideal for this. You won’t be limited to just the money you have in your bank account.
  • A credit card can be a cheap way to borrow money so long as you can clear the money you owe each month.
  • It is reassuring to know that you have access to credit if things go wrong.

Disadvantages of a Credit Card

  • It takes a lot of self-control to avoid falling into debt with credit cards. It is tempting to think of the credit limit as being money you have.
  • If you are unable to pay the money back you owe each month you will usually have to pay interest on this – it can be high.
  • You can be charged more interest for taking money out of an ATM machine with a credit card.
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Meet the Author

Anthony Carter currently resides in Fife, Scotland with his wife Lisa, and their three wonderful children. As a senior editor for various publications, if he's not reading and writing, you would find him photographing and traveling to some of the most far-flung locations around the world.

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