Credit Cards Vs Debit Cards: When to Use Which


Cards, whether debit or credit, offer the convenience of paying without having to carry cash.

But the types of cards work very differently. One of the main differences between the two is that a debit card takes money directly from your savings account, but a credit card uses the money borrowed from your bank.

While acknowledging the advantages that both these cards offer, it is important to know which card to use in different situations. Using your cards unwisely can impact your finances. Let’s consider a few instances to see which card works better for you.

While travelling locally or internationally

Everyone prefers to pay using their card while travelling. It is the smart and safe thing to do. But institutions like hotels and vehicle rentals put a hold on your card. A certain amount is blocked on your card as insurance in case you are unable to make the payment.

Debit Card:

Since these cards use the money in your savings or current account, putting a hold will reduce your cash flow. This can be a problem in case you run out of money or need funds urgently.

Credit Card:

Putting a hold on your credit card will still leave you free to use the funds in your account. You will not be directly curtailing your funds by using your credit card. Additionally, many hotels accept only credit cards for payment, thus it is the safer option while travelling.


Before you embark on your holiday or business trip, make sure to check your balance and plan your expenses.

Making expensive purchases

It is important to use a card that offers purchase protection buying jewellery, a phone, or something expensive. Making a big-ticket purchase, especially online, can be risky as it is. It is always better to have some form of guarantee that your purchase is safe.

Debit Card:

Account cards do not offer purchase protection. What this means is that if something goes wrong with your transaction, it can be difficult to get your money back.

Credit Card:

Almost all cards come with purchase protection so you can rest assured while making big-ticket purchases. Furthermore, some credit cards also offer price protection. If the price of the item drops, you could have the difference in the amount refunded.


Using your credit card to make expensive purchases can also earn you cash back or reward points. Check the latest promotions offered by your bank before making a purchase.

Shopping on a Budget

Do you find it difficult to stick to a budget while shopping? Whether its groceries or fashion, it can be difficult not to overshoot your budget.

Debit Card:

Use your debit card when you are shopping on a budget because you can only use the money that you have in your account. If you are prone to making unnecessary purchases, a debit card will help you control your spending.

Credit Card:

If you want to make sure that you don’t go on a shopping spree, it better to avoid taking your credit card with you. You will not be tempted to buy things that you cannot afford, and end up with a credit bill that could impact your finances.


If you are someone who can use a credit card judiciously, using your credit card for shopping can earn you discounts on your purchases.  

Auto-payment of utility bills

Keeping track of your utility bills, and making sure that you pay on time each month can be taxing. It is convenient to just set up auto-payment on your account. This way you will not be penalized for late or missed payment.

Debit Card:

Setting up auto-payment on your savings or current account might not be a good idea if you don’t have sufficient funds on the due date. You could end up paying overdraft fees. Another scenario to consider is, if there is a mistake in your bill and you get charged more than what you owe, there may not be a way to get your money back.

Credit Card:

It is safer to set up auto-payment on your credit card. Even if you don’t have the money in your savings account, you can for it with your credit card. Once you have the funds, you will be able to pay off the outstanding amount on your card.


Make sure that you haven’t used up your credit limit. If you have, the auto-payment of your bill will not go through, and you might end up paying a fine.

Online transactions

Debit and credit cards offer the convenience of shopping online. But there are many fake websites that can trick you into making buying things and rob you of your money. While shopping online, it is important to make sure that your purchase is safe.

Debit Cards:

Debit cards are not as secured as credit cards. They do not offer protection in case you make a purchase on any of the fraudulent sites.

Credit Card:

Use your credit card to shop online. Your card offers you protection against fraudulent transactions. Most banks offer a refund in such events.  


Use your credit card to make purchases. It’s safer and more secure than debit cards. Also, even if you lose money, chances are high that you will be able to recover the amount. All you need to do is inform the bank if any such incident takes place at all.

Shopping at Small Outlets

Do you prefer to pay with your card rather than cash even while shopping at your local store? Many small establishments accept card payment which saves you the hassle of carrying cash. This has made shopping, from vegetables to food, easy.  

Debit Card:

It is better to use your debit card to shop at small shops. This way you will not be cutting into your credit limit with small transactions. You will be free to utilize your credit limit for big purchases.

Credit Card:

Most small shops have to pay in order to be able to accept payment through credit cards. As this can impact the business, they might allow transactions using credit cards.


It is better to use debit cards at small outlets. In case they don’t accept credit cards, you will not be stranded at the bill counter with any mode of payment.

Even though the cost of owning a debit card is very less, and has no impact on your credit score, there are situations where a credit card will work better for you. You can apply for a credit card with no annual fees or a low-interest rate card and use it to make big-ticket purchases. This way, you can also build up a healthy credit rating by keeping up with your payments.

However, you cannot ignore the convenience of a debit card, especially for making purchases at the local store. Compare various credit and debit cards through comparison websites and apply for one that suits your purchase pattern.