Credit cards vs debit cards

Which one is right for you?

The kind of plastic card you use at the shops is an important decision and there are myriad factors to consider before determining whether a debit card or credit card is right for you.

What’s the difference between credit and debit cards?

When you use a credit card to make a purchase, you essentially borrow the money from the credit card provider and they pay the merchant on your behalf.

When you use a debit card, you are always using your own money from your account to make a purchase rather than borrowing money.

Rewards programs

Most debit cards don’t have rewards programs.

Many premium credit cards have a rewards program that enables you to earn rewards points per dollar spent on the card. You can redeem your points for rewards such as travel, merchandise, gift cards, cash back and products from your provider’s rewards store.

Rewards credit cards typically have higher interest rates and annual fees than standard credit cards. In order for rewards credit cards to be of value, you need to earn enough points to outweigh the annual fee and other transaction fees.

Cash withdrawals

While credit cards can be used for cash withdrawals, known as cash advances, they typically involve fees and additional interest charges. 

In most cases, cash withdrawals using a debit card are free and can be made at any ATM or larger retailers, such as supermarkets. 


The fees associated with debit cards are usually less than credit cards.

Credit card fees can include annual fees, cash advance fees, international transaction fees and late fees.

Interest charges

Interest charges apply when your credit card balance is not paid off in full by the statement due date. Interest rates vary for different card types and card providers.

There are no interest charges with debit cards as you are using your own money.

Online purchases

Credit cards and most debit cards can be used to make online purchases. Fees may apply from the merchant for both kinds of cards.

Need more info? Find out what you need to know before applying for a credit card or debit card.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person’s particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.