When to Choose a Debit Card vs a Credit Card

There is no right or wrong answer when the question is to choose between a credit or debit card. All that matters is whether you have understood the pros and cons of each. Most of the millennials are opting for debit cards over credit. However, credit card users say that others are missing on the perks like cash backs, miles, etc.

A Debit card vs a Credit Card: A war between rewards, uses, and fees

Below are a few uses, benefits and fees the cards come with. It is interesting to know neither of them has a majority.

Spending control

It’s fairly obvious who the winner is. Debit cards constantly give you notifications on your account balance and do not operate on line of credit. The only way to fall into debt with debit cards is by overdrawing your account, this can be avoided by opting out of overdraft protection. With credit cards, debt can be avoided only when you pay off the balances each month. But how often is that possible? On considering all things, it’s difficult to track how much you spend using a credit card than with debit cards. Winner: Debit Cards

Rewards

Finding a debit card with good rewards program might be challenging, while credit card’s one of the common features is Rewards. Banks earn higher profits through credit cards, so they are willing to offer competitive rewards to encourage customers to use the cards more often. Winner: Credit Cards

Fees

When applying for a credit card, be smart to check the cards rates, fees, and hidden charges any before submitting your application. You shouldn’t be surprised to see a slew of fees charged by the credit cards on your usage. For example, late fees, cash advance fees, foreign transaction fees, are a few among most common charges. These are all on top of the interest charges (if you carry a balance). On the other hand, debit cards do not come with a lot of such fees. Winner: Debit Cards

Fraud protection

The RBI has certain criteria to decide on the liability of customers for fraudulent transactions. In India, both the cards have 2 layered authentications. Until and unless the card details are not shared with anyone, there is nothing to worry about. It’s hard to determine who the clear winner is in India considering both the cards have similar authentication processes.

Which Should You Choose?

The Best Option May Depend on the Purchase. Be wise to choose when to use a debit card and when to use a credit card. If you are paying for car rentals, hotel stays, air ticketing, fueling car, recharging etc., then use credit cards as the merchant may place funds hold on your card. Some of these purchase may earn your rewards and benefits. Places where you see companies charging a percentage on credit card usage, you can use debit cards and save the money for contingencies.

If you are willing to use only one card for all your purchases, then the suggestion would be considering all the pros and cons of each card and choose the best one suiting you. Debit cards are better if you feel that you have no control over your spending, or want to avoid the temptation.