Comparing a credit card vs debit card is the smart thing to do when considering your options. Both cards facilitate easy payments, allowing you to transact offline and online, but do so very differently. One is linked to your savings account for funds, while the other allows you to spend within an assigned limit.
This distinction alone is worth noting, as it requires you to carefully consider the nuances of these options. To that end, here are insights into the credit card vs debit card comparison and the crucial factors to consider.
Debit vs Credit Card: Key Differences
While there are many differences, a crucial one is that a debit card enables you to complete transactions with funds from your savings account. On the other hand, a credit card utilises funds from a predetermined limit or a line of credit, and you are responsible for repaying this amount.
In addition to this, financial institutions frequently provide a debit card as a free gift when you open a savings account. While there are a few upgraded variants that you can apply for, you generally won’t have to, as you may get a free card.
On the other hand, a credit card is one that you have to apply for as it is a credit instrument. Issuers may extend pre-approved offers or special deals based on your relationship with them. Still, you can only get one if you apply.
Another key difference is the rewards program offered, which is where credit cards come out ahead. While modern debit cards may offer similar perks like cashback or discounts, credit cards help you earn points with each transaction. You can then redeem these points for vouchers, discounts, cashback, and other offers to save money.
Here is a quick comparison of other differences between these two types of cards.
Benefits of Using Debit and Credit Cards
Here are all the advantages of a debit card.
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Reduces the risk of carrying cash
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Simple eligibility terms make it easy to avail
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Allows you to withdraw cash with any added fee
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Widely accepted as a mode of payment
For comparison, here are the pros of a credit card.
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Gives you easy access to credit
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Has better security measures against fraud and theft than debit cards
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Allows you to earn reward points on most transactions
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Provides complimentary and exclusive benefits
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Builds your credit score when used appropriately
Limitations of Debit and Credit Cards
Here are a few downsides to a debit card:
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Limited access to funding, based on your savings balance
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Minimal rewards on transactions
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Usage does not improve your credit score
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May require a minimum account balance
On the other hand, here are the disadvantages of credit cards:
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May have a higher number of fees and charges
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Misuse can lead to high debt payments
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Defaulting on payments will lower your credit score
How to Choose Between Debit and Credit Cards
The most effective way to choose between the two is to compare their pros and cons. Based on these, you can determine which option suits your spending habits and patterns. However, if you had to choose one, consider these pointers.
Debit cards:
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Offer easy access to cash from ATMS
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Are widely accepted for payments
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Are usually a complimentary offering for opening a savings account
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Don’t affect your credit score
Credit cards:
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Improve your purchasing power
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Provide rewards on most transactions
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Have enhanced safety and fraud protection provisions
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Help you build your credit score
Ideally, you should have both, as they cater to different needs. However, credit cards come out ahead due to their enhanced features and benefits. This is especially true with options like the One Credit Card, which is a premium metal credit card.
With it, you have access to a wide range of features, and combined with the convenience of the app, One Credit Card easily becomes your preferred credit card. You can earn up to 5X reward points on your top spends, avail of the EMI facility, track your expenses, and more.
Best of all, you enjoy a completely digital experience right from the start. You can complete the online credit card application by downloading the One Credit Card app. Apply online to get a lifetime-free card without any hassles.