5 Benefits of Using Credit Cards Over Debit Cards

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  | Published: 03 August 2021

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In the cashless banking system, holding a credit or debit card is inevitable in today’s times. Also, there is a reason that these are the best financial tools for day-to-day expenses. Both credit cards and debit cards have their own set of perks and penalties, and using them wisely makes a huge difference in personal financial management. In this article, we are going to dig deeper into the benefits of using credit cards over debit cards and how it has revolutionized the banking system.

Difference Between a Credit Card & Debit Card

Debit Card

To use the funds from the account, the bank issues a debit card to the account holder. Whenever he/she makes a transaction (a purchase or fund transfer), the amount directly gets deducted from the bank account. Debit cards are an effective and convenient way of cashless transactions. But when it comes to benefits, a credit card wins over a debit card.

Credit Card 

A credit card provides short loans. In other terms, each transaction or purchase made on the credit card is a loan taken from the bank. The cardholder requires to pay that amount with or without interest within a time frame as per the credit card issuer’s norms. A credit card comes with numerous benefits such as shopping reward points and discounts, which can be redeemed from time to time. This increases the benefits of using a credit card over a debit card.    

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Benefits of Using a Credit Card over a Debit Card 

In general, both credit and debit cards may appear the same with 16 digit labels, secret PINs and CVV. However, once you know how they work, it becomes easy to plan your expenses. Listed below are five benefits of using a credit card over a debit card.         

  1. Build Credit History - Credit bureaus monitor every transaction and repayment on a credit card. A timely due payment increases the credit history, which increases the card limit and gives bigger reward opportunities. A healthy credit record can also help in acquiring bigger loan amounts. Debit cards don’t have any effect on the credit history.  
  2. Lucrative Rewards - The credit card issuer brings timely offers and benefits in addition to rewards points on each transaction. These rewards and offers can be redeemed and availed from time to time. Moreover, using a credit card can also offer heavy discounts on few expenses like travel and hotel bookings.
  3. Ease of Managing Bigger Finances - A credit cardholder can make a bigger purchase and pay it later in smaller chunks called EMIs with a nominal interest rate. Most banks offer these benefits on credit cards. However, before making bigger purchases, the cardholder needs to be aware of his/her credit limit and credit score. In the case of a debit card, the cardholder can only use the amount available in the bank account.
  4.  Security and Fraud Protection - A credit card always has the upper hand when it comes to security and fraud protection. If a suspicious transaction is made through the credit card, it’s actually the lender’s money that is at risk. If informed within a particular time frame, the cardholder can get the amount settled. However, he/she may require to pay a nominal amount during the theft report.On the other hand, when a debit card is used for suspicious transactions, it’s the cardholder’s money that is at risk, making it less secure in case of loss or theft.
  5. Purchase Protection and Extended Warranty - Certain credit card purchases also come with extended warranties and purchase protection. With purchase protection, the purchased item can be replaced or refurbished in case of damages during transportation and with an extended warranty, the item can be replaced even after the manufacturer’s warranty is over. These offers depend on the product brands and the card issuer.

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Additional Benefits of Using a Credit Card over a Debit Card

Apart from the earlier mentioned perks, credit cards also accompany plenty of additional benefits such as easy EMI options, fuel rewards, and travel and stay reward points. The credit card offers benefits in rental services as well.
Clearly, the benefits of using a credit card over a debit card for daily expenses are comparatively more. However, it is also important to understand that credit cards can have bigger penalties for missing out on repayment dates and have annual charges, which doesn’t apply in the case of a debit card. If that is not a big concern for you, then best credit card is the best option for daily expenditure and managing financial expenses.