Which is Better? Shopping with a Credit Card or Debit Card?

Gone are when people used to pay in cash to buy any product/service. At present, debit and credit cards are the preferred methods of making payments for shopping. However, there is always a debate about which is better for shopping – debit or credit cards. 

Both the cards can be used to make an online payment or swipe physically at shopping centres. As a responsible user, one should know the difference between credit card and debit card and which is better for shopping. Continue reading to learn the benefits of debit and credit cards in shopping.

Debit cards for shopping

A debit card is linked to any particular bank account. Whenever you make payments via a debit card, the respective amount will be deducted from your bank account. If the shopping amount is not available in your bank account, the transaction will be declined while paying via the debit card. You can use the debit card details to make an online payment for shopping. You can also swipe your debit card at a physical shopping point to make payments. Let us understand the difference between debit and credit cards by understanding their pros and cons. The advantages of using debit cards for shopping are as follows:

• If you aren’t using an overdraft facility from your bank, you do not have to pay an annual fee for making payments with your debit card. However, you will have to pay transactions charges implied by online payment gateways.
• If you don’t have a sufficient balance in your savings/current account, you cannot make a payment using a debit card. It can be counted as a positive as you will be subjected to controlled spending. However, you can use the bank overdraft facility to make payments with debit cards even with fewer funds in your savings/current account.
• You cannot carry any amount while shopping with a debit card. Due to the same reason, you are not subjected to pay interests while using a debit card.
• You cannot withdraw more than a pre-fixed amount via your debit card. Due to the same reason, debit cards offer some protection from theft. Most debit cards use a PIN to enhance the security of the user’s amount.

Some disadvantages of using debit cards for shopping are as follows:

• Most debit cards do not offer reward points for making payments. Some debit cards offer nominal reward points for making shopping payments.
• Your credit score will not increase even if you use a debit card for long.
• You will have to monitor your bank balance closely if you prefer using a debit card. Some banks levy overdraft charges when a user overspends.

Credit cards for shopping

Credit cards are a way of providing unsecured loans to users. You will be provided with a spending limit based on your income and repayment capacity. You can use the entire spending limit provided by the credit card provider if needed. The best credit cards provide many offers, vouchers, and reward points to users on making payments. The pros of using the best credit cards for shopping are as follows:

• Credit cards offer several rewards on making payments for shopping which can be redeemed later on. For example, many credit cards offer free air miles on making payments.
• By using a credit card, you have chances to boost your credit score. By making timely repayments, you can boost your credit score significantly.
• Many credit cards offer lower prices for several products/services. Also, credit cards can help get an extended warranty/guaranty for several products/services.
• The credit card provider has a greater liability if the credit card gets stolen or duplicated. If your credit card is stolen, you can complain and will not be liable for any purchases made after.

The cons of using credit cards for shopping are as follows:

• When using credit cards, users know that they can repay the amount later. Due to the same reason, many users tend to overspend and fail to repay on time. Many irresponsible users get themselves covered in debt by using credit cards.
• Credit cards charge a fixed annual fee or maintenance fee from users. Credit cards also have hidden charges like late repayment fees and amount transfer charges.