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Which is Better...a Debit Card or a Credit Card?

A Comparison to Help You Decide

Which do you think is better...a debit card or a credit card? Some say they will never use a credit card because they do not want to go into debt. Although that seems reasonable, there are other factors that need to be taken into consideration. To help you make your decision, let's consider the principal differences between a debit card and a credit card.


4 Things to Consider

There are many differences between a debit card and a credit card, but we are going to focus our examination on these 4 principal areas:

  • Bank account protection

  • Affect on your finances

  • Purchase protection

  • Rewards and perks


Bank Account Protection

Debit Card

Money comes directly out of your bank account. Charges are paid immediately, whether legitimate or not. You have to work with the bank to recover payment of fraudulent charges and not all of the funds may be recovered.

Credit Card

Card issuer pays the charges and you pay them back later. Since there is no direct connection to your bank account, greater protection is provided. Fraudulent charges can be disputed and removed from your account. You do not have to pay them unless the investigation proves they are legitimate.


Affect on Your Finances

Debit Card

Since charges are paid directly from bank account, you can only spend what you have. This can help you not overspend. However, using your debit card does not help build your credit. It has no affect on your credit rating at all.

Credit Card

Using a credit card to pay for purchases frees up your cash to help with cash flow. However, it does increase the risk of overspending. The balances should be paid off monthly to prevent building debt you cannot pay. Unlike a debit card, using your credit card can help build your credit. That's a big bonus.


Purchase Protection

Debit Card

Not provided.

Credit Card

Many credit card companies offer protection on purchases and extended warranties on some items.


Rewards and Perks

Debit Card

Limited, if any

Credit Card

Many offer rewards, perks and points, as well as, travel assistance and travel protection.


In Conclusion

Overall, credit cards offer the best protection and benefits. However, if you have difficulty controlling your spending or are habitually late making payments, a credit card may not be your best option. You could find yourself with damaged credit and debt you cannot pay. So carefully consider if you have the discipline to only purchase what you can afford and to make payments on time. If so, then a credit card is definitely the best option for you.

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