Credit Card vs Debit Card – The Pros and Cons of Each

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When it comes to the credit card vs debit card debate, you might think that they’re kind of the same thing give or take a few minor tweaks. But, in fact, they are very different. And each can play a different and important role in your finances and the decisions you make about spending money. After reading this article, you should have a clear strategy for when to use one or the other.

But first, let’s quickly cover a few of the big slimiarities between these two cards:

– They make it very convenient for you to make purchases without having to carry around lots of cash.

– They are generally accepted everywhere including retail stores, gas stations, super markets, repair shops, airports, etc.

– They provide you with a large degree of protection if they are stolen.

Suffice it to say, credit and debit cards are wonderful inventions or creations. But they are double-edged swords as well. Let’s examine the pros and cons of each.

What Is a Debit Card?

This is a payment device that is linked directly to your personal bank account. It’s like carrying cash without carrying paper money. For example, when you purchase groceries with a debit card, the money is transferred out of your bank account immediately.


– If you want to track and monitor your budget and spending closely, a debit card can be a great help. That’s because all your transactions will be recorded. You can access your online bank account to review all the details and compare them to your household budget figures. You can’t easily do that when you’re throwing cash around.

– Unlike credit cards, you won’t pay any interest on your debit card purchases.

– If your debit card is stolen, the thief won’t be able to use it because it requires a PIN.

– Because of the thousands of available ATMs, you can quickly withdraw cash any time of the day. But try to stick with your own bank’s ATM network or you may incur hefty transaction fees.


– Your debit card could be declined if your bank account cash runs low and you don’t have overdraft protection.

What Is a Credit Card?

This is a payment method that allows you to temporarily borrow money from the credit card issuer. It’s essentially a short term loan.


– A credit card can be your best friend in case of emergencies.

– If your card is stolen, you won’t be on the hook for all the financial damage that the thief causes.

– Many credit cards come with some sort of purchase protection feature. So if the appliance or electronic item you purchased with the card is damaged, and you want a refund or repair, the credit card company can help.

– If you pay your credit card bills on time, pay more than the minimum, and stay within the limit, it will help your credit score. A high credit score will translate into you being charged lower interest rates on a home, cars, credit cards, and other loans. That can add up to many thousands of dollars in savings over your lifetime.

– For many credit cards, you can earn points, rewards or cash back for your purchases. The points and rewards can be redeemed for airline tickets, vacations, electronics, computers, and more.


– The borrowed money doesn’t come cheap. If you don’t pay it off during the grace period, then you’ll be charged interest every month until it is.

– If you don’t make payments on time, this could result in late fees and hurt your credit score.

– If you don’t have sufficient self-control, credit card spending can get out of hand. The habit of overspending can be a drag on your ability to build wealth.

Credit Card vs Debit Card – Conclusion

It’s clear that both debit and credit cards are great tools. But I want to leave you with some tips on when to best use each card:

– Pay for perishable items such as groceries with your debit card. The only time you should ever consider purchasing these types of items on a credit card is if you habitually pay off the balance in full every month within the grace period. This way, you won’t pay any interest.

– If you’re struggling with debt or trying to live within a tight budget, then pay for all your expenses with cash or through a debit card. Keep a credit card on hand for emergencies only.

– When applying for a credit card, review the details closely. Just because it comes with perks and rewards doesn’t mean it’s a good deal if the interest rate and fees are sky high.