October 2, 2022
debit vs credit card

debit vs credit card


When making a purchase, a swipe of plastic might be delightful, but should you use a debit card or credit card? 

Debit cards are still more widely used in India than credit cards.

However, according to RBI data, Indians prefer to shop with a credit card online, while debit cards are more commonly used in stores. 

As per March 2022 report, 7.3 crore credit cardholders spent Rs. 68,327 crores online, versus Rs. 38,773 crores spent in stores using card swipe machines.

However, each option has advantages and disadvantages and understanding when to utilise each can help you make smarter financial decisions and receive incentives on purchases. 

While debit cards are widely utilised, there are numerous situations in which using a credit card is advantageous. 

This blog covers some scenarios where you can use a debit card and others in which a credit card could be a better option to make an informed decision. 

What exactly is the difference between credit card and debit card?

A debit card is a form of a card that is linked to one’s savings and current account. 

The money is deducted from your account balance when you use a debit card to make a transaction. 

On the other hand, credit cards give you access to a credit line that you can use to borrow money. 

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When you buy something on credit, you can pay the whole amount, make a minimum payment, and carry the rest over to the next month.

Further, if you do not pay off the balance on time, you will start accruing interest charges, which could end up costing thousands of rupees over time. 

Which option is better and when – Debit card vs. Credit card?

While each has its own set of advantages and disadvantages, the following scenarios will help you decide whether to use a credit card or a debit card:

  1. Paying utility bills

When paying utility bills such as water, power, and gas, it is often confusing whether to opt for a debit card vs credit card.

Both these cards offer cashback and rewards; however, when you pay using a debit card, keep in mind that the funds are deducted at the same time from the bank account.

However, if you make payments through credit cards, you are borrowing money that has to be paid after a certain period. 

Thus, it is better to analyze your situation and see which option provides more benefits before paying the bills.

  1. Shopping online

You can use both debit and credit cards when shopping as both provide many benefits and convenience of use. 

When shopping with a credit card online, you are eligible for various perks such as rewards, better discounts on brands, and a better credit profile.

Conversely, you can avoid sliding into debt if you use a debit card.

  1. Large purchases

Using a credit card to make significant purchases is one of the convincing reasons in its favor. 


This is since credit cards have a higher expenditure limit than debit cards. 

In addition, even if you do not have enough cash in your bank account, you can make a purchase and convert it into affordable EMIs. 

  1. Paying immediately

Using your debit card is the greatest solution if you need to transfer cash to someone right away. 

Regarding debit cards, the transaction processing time is quite short, ensuring one receives the cash immediately.

  1. Emergency

If you are in the middle of a financial crisis and need to cover emergency bills, your best alternative may be to use a credit card. 

Consider applying for a credit card if you require additional time to pay for unexpected expenses and when your account balance is low. 

  1. Making travel reservations  

While you can use a debit and credit card for making travel plans, credit cards are usually a better alternative. 

Credit cards provide more benefits than debit cards, and you can earn reward points and miles and use the airport lounge access provided by your card.

  1. Dining out

When it comes to dining out, both cards have perks. Since they have tie-ups with many merchants, you can look up the dining specials for each card before using it. 

  1. Credit profile

Credit cards are one of the most effective ways to establish credit and enhance credit scores by demonstrating how you regulate credit regularly. 

If you want to improve your credit, utilize credit cards regularly, make timely payments, and only utilize a tiny amount of your credit limit.


Your financial condition and spending patterns will help you decide whether to use a debit or credit card.

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If you do not have sufficient funds in your bank account to pay for an item immediately, or if the purchase is significant and you want to pay it off over time, using a credit card is the most viable option.

It provides a convenient grace period, allows you to earn rewards, and improves your credit score. 

Conversely, a debit card may be a better option if you have a history of overspending, need to stick to a strict budget, or want to avoid excessive interest rates.

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