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Debit Card vs Credit Card - When to use them?

IamCheated.com Research Team | September 15, 2018  6:57:pm

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

While there are many payment options available, we Indians rely mostly on debit and credit cards. Even though debit cards and credit cards are the preferred mode of payment, many people are not aware on when to use a debit card and when to go for a credit card. In this blog, we will discuss when you need to use them.

1. Based on your behavior

If you are the 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. In case of a debit card, you can spend only as much as you have in your savings bank account. Whereas, in case of a  credit card, you spend now and pay later. But, if you are confident that you can use the credit card wisely and pay off monthly bills on time, then you can use a credit card.

2. Rewards and benefits

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

3. Based on the type of purchase

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

See Also: Credit Card Hacked: 4 Signs You Need To Know

4. Protection against frauds and scams

It is safe to use both credit and debit cards in India, if you are aware on how to use them and know how frauds are committed. Also, two-factor authentication is required to validate any transactions that take place with your card. The main disadvantage 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 raise the issue with the credit card issuer and get appropriate reversals, before you get your credit card bill.

Actually, both debit and credit cards have their advantages, but in the case of a credit card, if you do not use it wisely, there are chances of ending in a debt trap. You have to pay credit card bills on time. In case 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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