Debit vs. Credit card – What’s the Difference?

There are so many differences between debit and credit cards. For one, debit cards are linked to your bank account, so the money is immediately taken out of your account when you use a debit card.

On the other hand, credit cards are loans you will have to pay back with interest. Additionally, debit cards can only be used as funds you already have available, while credit cards give you access to extra funds that you may not otherwise have. Finally, most debit cards don’t offer rewards or cash back as many credit cards do.

Main Difference

Debit and credit cards are both plastic cards used to make purchases, but there are some essential differences between the two. When you use a debit card, the money is immediately sent from your checking account to the merchant. Since debit cards are connected directly to your checking account, this process happens almost instantaneously.

On the other hand, credit cards are loans that must be repaid with interest. You borrow money from a credit card company when you use a credit card. One more distinction that can be made between debit and credit cards is that debit cards provide a minimal amount of protection against fraud in comparison to credit cards.

Read More: Crypto vs Stock Market

What is Debit Card?

This means that once you’ve been approved for the card and added to your approved financial institutions, the card is linked to your bank account and can be used as a regular debit card.

On the other hand, credit cards are not linked directly to your bank account. Instead, they’re linked to your credit score. If you use a credit card for an emergency purchase, you may be required to pay back your debt plus interest and fees.

So, which is better? That depends on your financial situation.

Advantages of Debit Cards

There are many advantages of Debit Cards, some of which are discussed below:

  • A debit card withdraws money you already have saved from your checking or savings account, while a credit card loans you a set amount of money you will need to pay back with interest.
  • Debit cards are often linked directly with your bank account, making them a more secure option since they aren’t as vulnerable to fraud as credit cards.
  • You can often also use a debit card to purchase items from online stores, even if you don’t have a credit card or bank account. They’re convenient for people who want to make small, everyday purchases but don’t want to carry cash or write checks.
  • If you choose a debit card, make sure it’s linked to a checking or savings account with enough money. It’s easy to spend more than you have when using a debit card, and your bank might not always let you know when your funds are low.
  • If you’re worried about being able to keep track of your debit card, consider using a prepaid debit card. It’s essentially a debit card funded in advance and comes with a set amount of money.

Disadvantages of Debit Cards

  • A debit card gives you access to the funds in your checking account, allowing you to make purchases or cash withdrawals at any time.
  • But using a debit card can be risky. If you lose it or someone steals it, you could be responsible for the losses.
  • You’ll have to pay back the money if someone gets access to your account and makes unauthorized withdrawals.
  • Your bank can take money from your savings or other accounts if you don’t pay it. You could also face fees if you don’t report the card missing or stolen within two business days of discovering it was lost or stolen.
  • Credit cards offer a higher level of protection than debit cards do. There is no waiting time for a cash advance, so if your card is lost or stolen, the thief will be able to use it immediately if they know your PIN information. This is because there is no waiting period.

What is Credit Card?

A credit card is a type of loan. When using a credit card, you borrow money from the credit card issuer. You will need to repay the borrowed funds, plus interest and fees if any.

Credit cards are convenient and allow you to buy things wherever you can access a card terminal.

Credit cards are not the same as debit cards. When you use a debit card, you directly withdraw money from your bank account. You cannot spend more than you have in your bank account and must repay the lender immediately.

Read More ETF vs. Mutual Fund

Advantages of Credit Cards

  • credit card is beneficial in many ways; some of them are described as:
  • Credit cards require you to submit an application and go through a credit check before approval.
  • With a credit card, you’re borrowing money from a lending institution up to a specific limit and will need to pay that money back over time with interest. This can be helpful if you need to make a large purchase or want to earn rewards points, but it can also lead to debt if you’re not careful.
  • Credit cards have become a popular and easy way to pay for goods and services.
  • Another advantage of using a credit card is that it allows you to shop confidently at millions of locations worldwide that accept Visa, MasterCard, or American Express.
  • The NPS Chief said a credit card could be used at cashless toll booths across the city and would ease traffic on roads.
  • Credit cards are accepted everywhere, including in stores and online retailers.

Disadvantages of Credit Cards

  • Credit card loans you a set amount of money that you will need to pay back with interest.
  • Credit card charges interest on the number of purchases, which is not suitable for people who don’t pay their credit card bills in full each month.
  • The interest rate on credit card loans is usually much higher than the interest rate on a personal loan or a home mortgage.
  • If you don’t pay your credit card bill in full each month, the interest on your purchases will add up, and you will have to pay more than you borrowed when the bill is due.
  • The credit card company may charge you an additional fee if you make a late payment on your credit card bill. If you don’t pay off your entire credit card balance each month, it can take years to pay off the debt.

Key Difference Between Debit Card and Credit Card

Debit and credit cards are both used to make purchases, but there are some critical differences between the two.

For one, debit cards are linked directly to your checking account, whereas a credit card entails borrowing money from a lending institution.

When you use a debit card, the funds for your purchase are transferred immediately from your account to the merchant, whereas when you use a credit card, you’re borrowing the money for your purchase and will need to pay it back later with interest.

Another key difference is that debit cards offer less protection against fraud than credit cards. If your debit card information is stolen and used by someone else, it’s much harder to get your money back than if it were a credit card.

Comparison Table Between Debit Card and Credit Card

Credit Card

Debit Card

Borrow money to pay for your goods and then repay the loan later. Your purchases will result in a transfer of funds from your bank account to pay for them.
Can you be of assistance in building up your credit history I will not assist you in constructing your credit history.
You will most likely be charged interest if you don’t pay your account in full and by the due date each month. There are no interest fees.
There is a cap on the seller’s liability for fraudulent transactions. You could be liable for fraudulent purchases


In conclusion, the main difference between debit and credit cards is that credit cards allow you to borrow money from a lending institution which you will need to pay back with interest.

With the debit card, you can only spend the money you have already deposited into the associated bank account because the card is directly linked to the financial institution. A credit card may be used to obtain a loan from a financial institution.