You can use both debit cards and credit cards for almost anything: everyday spending, shopping online, and even paying bills. But which type of card is best? Debit cards are used as plastic money. You can use it like an ATM card to withdraw money from your account or paying by swiping the card at merchant outlets instead of paying by cash. The appeal of debit cards is that you don’t go into debt when using them. They limit spending to what’s available in your checking account. Your credit card, on the other hand, is like a loan: When you open a credit card, you’re approved for a certain line of credit. Also known as a credit limit, a line of credit is how much you can spend before your card is “maxed out” and can no longer be used for purchases.

Debit CardsCredit Cards
DebtNo DebtHave debt
InterestNo amount is borrowed.Hence no interest charges. Only if you haven’t paid your bills on time
Withdrawel /purchase limit Assigned on a daily basis.Some cards don’t have limits. Set on a monthly basis.
BillsNo bills.Account statements generated instead.Generated every month.
Linked toThe cardholder’s bank account.Issuing bank or financial organisation account.
Credit Score No credit taken.So no credit score. Consistent failing to clear the bills within due date leaves a negative impact on your credit score.

Which is better?

A credit card is best for most purchases. When you shop online or in-person, a credit card protects you in several ways that a debit card can’t (including sheltering your checking account, extended warranties, and more). The key is to pay off the card’s balance completely every month to avoid finance charges.

A debit card is best for cash withdrawals and debt avoidance. For cash withdrawals at ATMs, your debit card is the best option. You’ll keep fees at a minimum, and your card information is unlikely to get stolen if you stick to safe ATMs. If a credit card will tempt you to take on a mountain of debt, stick with a debit card. But ultimately, you need to take charge of your spending (the type of card you use can’t do it for you). If you don’t do that, you’ll find ways to cheat and spend more than you should regardless of what’s in your wallet.

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