Which is better debit card or a credit card?

In this article, we explain the basic differences between a debit card and a credit card and back you up with sufficient research to answer the question on which of these is better.

Which is better debit card or a credit card?

With around 253 million Indian citizens falling under the ‘adolescent’ bracket in India, education about basic financial knowledge has become an integral part of education systems, to build more awareness about the ‘adulting’ way of life. Reports dictate that most of these adolescent citizens have considered opening a bank account at least once in their lives and have begun researching the different kinds of bank cards they can own. The main question, at the moment, is which one has a higher provision for benefits -- debits cards or credit cards? In this article, we explain which card is better, expanding on the basic know-how needed to understand both types of plastic cards.


Debit card meaning: With the swipe or tap of your debit card, money is immediately deducted from your checking account in order to complete your transaction. Normally, most teenagers start out with a debit card because of the safety measures that come along with it. You will definitely not be able to spend over your account balance limit with a debit card. However, in emergency situations where you need more money than what you have in your personal checking account, a debit card may cause more frustration than aid in the resolution of the problem.

Credit card meaning: With the swipe or tap of your credit card, money is deducted from the pre-approved credit limit you are provided in order to complete your transaction. To restore your credit limit, a monthly credit bill is emailed to you which must be paid within a stipulated time period. Credit cards are associated with several disadvantages because of the power they can have in your life. If a bill is not paid in time, your credit score can get affected and, in turn, your chances of getting a loan application approved at a later date, or your chances to apply for other credit cards will be impacted as well. Your credit score is determined by looking into your history with credit -- timely payment of bills, repayment of loans and any general credit defaults. The advantage of having such a card, however, is the reward structure that comes along with it. Every credit card comes with a reward structure. Depending on the type of credit card you own, you can avail of these rewards in the form of discounts, cashback or reward points.

Differences between a credit card and debit card

Just in terms of their pros and cons, both these cards hold huge contrasting points.

Debit cards: Investments in debit cards come with very little to no risk because of their ability to eliminate the racking up of debt. Shopaholics or impulsive spenders will be able to make transactions up to a certain limit and not exceed it, thereby adding to their financial responsibility. It also comes with no annual fee or withdrawal fee (from an ATM) unlike credit cards. However, it is subject to other maintenance fees. It also does not help you compensate for the transactions you have made through a pre-approved reward structure.

Credit cards: While debit cards augment your financial accountability by setting up restrictions on how much can be spent, credit cards increase your financial responsibility by making you more aware of your credit score and timely payments which, if not paid, can have repercussions. These cards are also more secure because of the protection -- warranty, purchase and fraud protection -- they offer to the cardholders. However, as mentioned earlier, if payments are not made on time, the consequences can be terrible, and can contribute to the extant annual fees and interest rates you have to bear.

Statistics: An Indian context

To elucidate how imperative this article is, especially within our current economy, we have decided to put things into perspective for our readers. As of 2020, the number of reported debit cards owned in India has been reported as 829.4 million, whereas the number of credit cards issued stands at 57.4 million. This report was heavily influenced by the Indian government as between 2019 and 2020, around 30.9 million debit cards were declared incapable of finding, while concurrently, a surge of 9.4 million credit cards was added to the Indian economy. April 2020 witnessed a potent dependence on swiping machines, with 208.3 million debit cards and 77.1 million credit cards getting swiped in India.

Concluding remarks

To conclude, although according to the statistics detailed above, debit cards are widely preferred by Indian citizens as compared to credit cards, credit cards still have numerous pros that outweigh the benefits offered by debit cards. Ultimately, the choice is up to you on which card to invest in. A credit card provides an individual with higher rewards, but also comes with higher risk. If you deem yourself responsible to make timely payments, then a credit card can be of great help.



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