When deciding between a credit card and a debit card, it’s important to consider various factors such as rewards, fees, fraud protection, building credit, and online safety.
Rewards and Fees:
Debit Card:
Far and few debit cards earn rewards, but some may offer interest on your checking account deposits. Debit cards themselves typically don’t have annual fees, but checking accounts often charge monthly account management fees if balance requirements aren’t met .
Credit Card:
Credit cards often offer rewards such as cashback, points, or miles for purchases. However, some credit cards may have annual fees.
Building Credit:
Debit Card:
One major disadvantage of a debit card is that you can’t build credit with it. Debit card activity is not reported to credit bureaus, so it doesn’t contribute to building a credit history .
Credit Card:
Using a credit card responsibly by making timely payments can help build a positive credit history.
Fraud Protection:
Debit Card:
Debit cards may have overdraft fees and may charge fees for using out-of-network ATMs. In case of fraudulent transactions, the liability for unauthorized transactions on a debit card can be higher compared to a credit card .
Credit Card:
Generally, credit cards are considered to provide better protection against fraud compared to debit cards .
Online Safety:
Debit Card:
When it comes to online purchases, using a debit card may carry more risk compared to a credit card. If a debit card is hacked, you may have to fight to get your money back, whereas with a credit card, the card issuer must fight to get its money back .