Credit Card vs Debit Card

Credit and debit cards are forms of payment solutions which can be processed both online or offline. A credit card allows the holder to use funds in credit while a debit card only permits the holder to spend what is available in his/her account. These payment solutions subsequently offer cardholders an accessible, flexible and safe option to pay for goods and services depending on their circumstances.

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Credit cards and debit cards compared

Below are the advantages and disadvantages of using credit and debit cards as a payment solution.

Credit Card

Debit Card

Advantages Advantages
  • Safe – paying large amounts for goods without carrying cash around with you.
  • Protection – everything bought is detailed on your bank statement allowing you to get compensation for damaged or stolen goods.
  • Emergencies – when you are unable to pay upfront, the credit card allows you to pay for goods/services.
  • Benefits – most credit card companies offer a wide range of benefits with their card such as discounts in particular places.
  • Accepted – most debit cards are widely accepted.
  • Online – they are a safe method of online shopping as they have a limit to spending and you can keep track of your account balance.
  • No need to carry cash
  • No interest – do not have to pay a high rate of interest as the money you spend is owned by you.
Disadvantages Disadvantages
  • Budget – most people tend to over spend.
  • Interest rates – banks charge high interest rates, which essentially mean that you end up paying more in the long term.
  • Fraud – risk of fraud where the card is stolen.
  • No additional benefits such as discounted travel.
  • Cannot overspend – debit cards only allow you to spend the funds which are in your account.