Credit Card vs. Debit Card: Which card is better for you? Find out the complete breakdown of the advantages and disadvantages of both..

In today's world, paying with a card instead of cash has become the easiest and safest method. Whether it's online shopping or offline purchases, most people use a credit card or a debit card. But people are often confused about which one is more beneficial. Some consider credit cards to be a better deal, while others find debit cards sufficient. Here's a complete comparison of the differences, advantages, and disadvantages of both to resolve all your doubts.

Basic Difference Between Credit Card and Debit Card

A debit card is directly linked to your bank account. As soon as you make a payment, the amount is immediately deducted from your account. With a credit card, the bank lends you money up to a certain limit. You spend now and repay the amount later by a specified date.

Credit Card vs. Debit Card: Complete Comparison

1. Credit Limit
Credit Card: It comes with a pre-determined credit limit, which depends on your income, credit score, and relationship with the bank.
Debit Card: You can only spend as much money as you have in your account.

2. ATM Cash Withdrawal
Credit Card: Withdrawing money from an ATM incurs a cash advance fee and immediate interest. This can be quite expensive.
Debit Card: There is usually no charge for withdrawing cash from your bank's ATM.

3. Interest
Credit Card: You get interest-free credit for up to 45-50 days if you pay the full amount on time. Late payments incur high interest charges.
Debit Card: There is no interest involved.

4. Annual Fees
Credit Card: Some cards have annual fees, although many no-annual-fee cards are also available.
Debit Card: There are usually no annual or renewal fees.

5. Benefits and Rewards
Credit Card: Offers cashback, reward points, discounts, travel, and shopping offers.
Debit Card: Benefits are limited, and fewer offers are available.

6. Usage
Both cards can be used online and offline.
Some international websites or hotel bookings only accept credit cards. 7. Eligibility
Credit Card: Issued based on income, credit score, and credit history.
Debit Card: Issued upon opening a bank account.

8. Security Features
Credit Card: Offers OTP, PIN, SMS alerts, and Zero Liability Protection.
Debit Card: Offers OTP and SMS alerts, but Zero Liability protection is not available on all cards.

Difference between the two at a glance
Point    Credit Card    Debit Card
Source of Funds    : Borrowed from the bank    , from your bank account
Interest    Yes, on late payments    No
ATM Cash Withdrawal    Expensive    Usually free
Rewards    More    Less
Annual Fee    May apply    , usually none
Eligibility    : Income and credit score required    . Having a bank account is sufficient

Conclusion
A credit card is a better option for those who want flexibility in their spending and have the discipline to make timely payments. It not only provides immediate help in emergencies but also offers additional benefits like reward points, cashback, and offers. Furthermore, using it correctly can also strengthen your credit score. However, high interest rates and penalties for late payments can be a heavy burden on your finances. Therefore, it is essential to use a credit card wisely and responsibly.

A debit card is considered the safest and easiest option for everyday expenses. With it, you spend only the money available in your bank account, eliminating the risk of overspending. There are no interest charges or heavy fees, keeping your budget under control. However, it offers limited rewards and offers, and it doesn't help in building a credit score. In short, a debit card is suitable for those who prioritize spending control and simplicity.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.