Both credit cards and debit cards are widely used to make purchases or pay for expenses. The process of making a transaction is similar. You can pay for the purchase of goods and services with a single swipe. With the rising cases of scams and identity theft, you may want to apply for credit card rather than get a debit card. In terms of the safety and security of your sensitive information, they both are different.
Getting a credit card is a safer deal than using a debit card. Whenever an unauthorized transaction takes place from your debit card, the funds are deducted from your bank account. A debit card comes with lesser protection against fraud. Let us understand how a credit card is a safer option than a debit card:
| Feature | Credit Cards | Debit Cards |
| Bill | Generated every month | There is no bill generated. Account statements are generated instead. |
| Linked to | The issuing bank or the financial organization | Debit card holder’s account |
| Spending | Credit limited decided by your card issuer monthly | Cash withdrawal and PoS limit are assigned on a daily basis. Some debit cards do not have a PoS limit. |
| Interest Charges | Interest charges applied for making a late payment | No interest charges are applicable. |
| Credit Score | If you fail to make repayments within the due date, your credit score will be affected negatively. | The concept of credit score does not apply to debit cards. |
A credit card is safer than a debit card; why?
Before deciding to apply for a credit card or debit card, it is imperative to understand everything about both of your options. You must know the difference between a credit card and a debit card to make an informed decision.
- Protection against fraud and theft
Sometimes, you may lose your debit card, or it gets stolen, or your sensitive information is compromised. If you lose your money from your debit card, all you can do is report the matter to your bank and block your debit card. The funds stolen from you is not sent back to your bank account.
A credit card comes with added safety and protection against fraud and theft. Whenever your money is credited from your credit card without consent, you can immediately report the incident to your credit card issuer. They will credit the same amount, reducing your liability.
- Your credit card limit is not your money
Your debit card is linked with your savings or current account, which means that funds are deducted from your account every time you make a transaction using your debit card. If someone scams you or uses your debit card to make a transaction, your bank account will be drained of its balance amount, and you will have to wait for weeks and months until your bank investigates the matter and debits the transacted amount back to your account.
As with a credit card, your credit card issuer decides a credit limit based on your income and creditworthiness. You can use your credit card limit to make purchase transactions on goods and services. It allows you to pay for all your expenses. You are using the issuer’s money. The best part is that when it is used fraudulently, your bank or credit card issuer will replenish the fund.
- Extension of warranties and returns
It is worth noting that a credit card offers an extended warranty and return facility on particular services purchased both online and offline. The benefit of an extended warranty is that it starts when the manufacturer’s warranty ends. So, your credit card issuer will offer to either repair the goods or replace them for you. However, it is worth noting that any purchase of goods that comes with no warranty is ineligible for an extension.
- Dispute misleading transactions and charges
Another difference between a debit card and a credit card is the factor of disputing any misleading transactions and charges. For instance, when you use your debit card online and are charged falsely, you can raise a dispute by reaching out to the seller and liaising with them. It can take your precious time and is stressful at times. However, with a credit card, you can raise your disputes directly with the bank. They will liaise with the vendor on your behalf. It also enables you to file disputes for fraudulent transactions and billing errors.
- In-hand security features
Some credit cards come with in-hand security features that allow you to control their usage limit. You can also keep a tab of all its transactions. This way, you can learn about any fraudulent activities and report them to your credit card issuer without any delays.
Conclusion
The above-said arguments clarify the difference between a credit card and a debit card. Opting for a credit card is a safer option than using a debit card to make purchases. The best part about a credit card is that it comes with a host of features, such as reward points, cashback, and joining fee waivers, surcharge waivers, etc. Using a credit card can help you save money significantly.
