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Credit card or debit card: Which is the better choice?

The Motley Fool logo The Motley Fool 17/03/2019 Peter Stephens

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not represent the views of MSN or Microsoft.

The UK is becoming a cashless society.

Fewer cashpoints, improved technology and consumers who naturally favour convenience mean that the use of debit cards and credit cards is likely to increase. In fact, by 2026 the value of card payments is expected to be £942bn, which would represent an increase of 48% on the 2016 figure of £638bn.

With that in mind, should consumers use a debit card or a credit card? Or is there room for both, depending on personal circumstances?

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Money management

Since debit cards only use money that is already in an individual’s bank account, some consumers may find them a simple way to keep track of how much they are spending. This can help them to manage their money more easily, since they will be unable to live beyond their means with a debit card.

Although it may take time for recent transactions to appear on a digital statement, unless an individual has an overdraft they are usually unable to spend money that they do not have. It is, though, worth checking a bank’s terms and conditions so that it is not possible to become accidentally overdrawn.

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In contrast, payments made with a credit card cause a debt, or balance, to build between a consumer and the credit card issuer. Essentially, when a purchase is made, the credit card company pays for it and later issues a monthly bill to the consumer. The consumer then either pays the bill or pays interest on the outstanding balance. As such, it can be more difficult for an individual to keep track of their finances, since it is possible to spend money that a consumer does not have with a credit card.

Of course, being able to spend money that an individual does not have today can be an advantage. In an emergency, a credit card provides instant spending power that may not be available with a debit card. For example, someone may need to undertake a home repair a few days before payday. With a debit card this may not be possible, but a credit card would provide greater financial flexibility since the amount can be paid back later.

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Consumer Protection

Credit cards provide greater consumer protection than debit cards when the amount spent is above £100.

Should a business fail to provide the goods or services that have been ordered, for example, a consumer would receive a refund from their credit card company. Similarly, if a company goes under, consumers are protected for goods or services paid for by credit card. In the same scenario, debit cards do not offer such protection.

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Credit Score Benefits

A credit card can also help to build an individual’s credit score. This can prove useful in future, should other debt products such as a mortgage be required. And with a variety of credit cards now available that do not charge a fee, they are becoming increasingly available to people on a wide range of incomes and with varied financial circumstances.


A debit card is a worthwhile method of payment for individuals who may struggle to keep up to date with their overall spending. It is a simple means of spending only the money that is in a bank account.

However, for emergencies or for amounts above £100, credit cards appear more attractive than debit cards.

It may, therefore, be sensible to have both a credit card and debit card available, to use depending on an individual’s personal requirements. 


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