Debit cards vs Credit cards

Once you’ve read up on what a debit card is and considered all the fees and features it comes with, the next question on your mind might be, but is it as good as a credit card? Is it better?

Well, to help you answer that question, we’ve compared the two in some of the major areas that matter. 

Ready to start your search? Check out our top cards. 

What is the difference between debit and credit?

The main thing that sets a debit card apart from its credit card cousins, is that a debit card gives you access to your own money, while a credit card lets you borrow money - essentially like an easily accessible personal loan.

That means that when you use a debit card, you’re spending only the money in your transaction account. So, generally speaking, you don’t pay interest, and there’s no risk of racking up a big debt.

Snapshot comparison

Here’s a quick look at how credit and debit cards compare:

Now let's take a look at those features and a few more important points in a little more detail...

Available funds

The number one reason you have this piece of plastic in your wallet is so you can have convenient access to money, right?

Debit card: Only the funds in your bank account are available to you. Some debit card issuers will also offer the option of an overdraft service - but this often turns out way more expensive than it’s worth. There’s also sometimes a withdrawal limit to consider - for example, if your limit is $2,000 a day, it doesn’t matter that you have $3,000 in your account, you won’t be able to spend the last $1,000 using your debit card.

Credit card: You aren’t limited by the size of your bank account when using a credit card - just by the credit limit you can qualify for. If you’re new to using a credit card, you might have one with only a small limit, but this can increase as time goes on and you prove yourself as a responsible borrower.

Fees and charges

You don’t want to wind up paying a bunch of extra fees on top of what you spend at the grocery store, so the fees and charges that come with using plastic are important to know about.

Debit card: A debit card has no annual fee, although, the bank account it’s linked to might come with a monthly service fee. You also won’t pay any interest, so a debit card is a pretty cost-efficient way to spend. But remember, you will pay surcharges for using a debit card at some businesses - it should be around 0.5%.

Credit card: Credit cards can pack a real punch in the fees department if you’re not careful. The main extra charges to consider include annual fees, cash advance fees and the interest rate you’ll pay on your spend. You’ll also pay surcharges at some business, which are usually a bit higher than on debit cards - between 1-3%, depending on what card you have.


Everyone loves a freebie, so why not pick up extra perks when you hit the shops? 

Debit card: Some debit cards do offer the option to earn rewards on your spend - points schemes, cashback on tap and go purchases and exclusive retail offers - but many don’t, and if you're in it for the freebies, a debit card isn’t likely to satisfy you.

Credit card: There are heaps of awesome rewards credit cards that offer everything from retail rewards and free flights to complimentary travel insurance. Keep in mind that you’ll pay more in fees and interest to have one of these cards in your wallet - but pick a good one and the perks can more than make up for that.

Chance of debt

Although plastic is convenient, that’s hardly worth saddling yourself with a bunch of debt next time you hit the shops.

Debit card: The only way to wind up with debt when using a debit card is if you’ve used the overdraft service - in which case you might wind up paying some hefty fees and interest. But if you use your card responsibly or opt out of the overdraft service, you can’t really go into debt using your debit card, because you can’t spend money that isn’t yours.

Credit card: Ok, so it’s no secret that credit cards can lead to a bill as long as your arm, and a fair bit of debt. That’s because, although people don’t think about it this way, a credit card is basically a loan that needs to be repaid each month. Worried about winding up with credit card debt? Read our guide on how to manage your credit card balance effectively.

Credit history

If you’re ever planning to borrow money in the future - say, getting a home loan so you can enter the property market - then you’ll need to have a good credit history, so your lender will give you the best deal. Your current spending habits can help you build that history.

Debit card: Using a debit card doesn’t affect your credit history, because you aren’t accessing credit - just your own money. This is good because there’s no chance of you damaging your credit rating, but it also means you aren’t making any progress toward establishing a good credit history either.

Credit card: Your credit card use will affect your credit history. Responsible spending will build you a reputation as a good borrower and stand you in good stead for borrowing larger amounts of money later or. The flip side is that if you lose control of your credit card balance, it will reflect badly on your credit rating, and might even prevent you from securing a loan later on.


One of the good things about plastic, is that it’s often safer than carrying a bunch of cash around in your pocket! Having said that, it comes with a few safety concerns of its own.

Debit card: Although having a PIN makes debit cards pretty secure, you do have to be careful because it’s a direct link to your money. If you lose the card, anyone can pick it up and use it, and if you become the victim of fraud, there’s not much to stop someone cleaning out your account, although if you alert your bank right away, most will reimburse you.

Credit card: There’s just as much chance that you’ll become a victim of fraud or theft with a credit card as with a debit card. The difference is largely that a credit card isn’t a direct link to your money, and if you report the fraud before making any payments, chances are you won’t end up liable to foot the bill.


Having a piece of plastic in your wallet is all about convenience - so just how hard is it to get your hands on that plastic?

Debit card: Easy-peasy. In fact, when you sign up for a bank account, many providers will offer you a debit card to go along with it. There aren’t really any stringent requirements to have a debit card because, as we mentioned before, you’re only accessing your own money.

Credit card: Much harder. You’ve got to fill in an application to have a credit card, and provide details about your finances, employment and income. Some credit cards even come with a minimum income requirement. This is because your credit card gives you access to the bank’s money - so they want to know you will act responsibly and that you have the ability to pay it back.

Check out our guide to applying for a credit card.

So which is better?

That’s a question only you can answer. Debit cards are great for risk-free access to money you already have tucked away in your account. Credit cards, on the other hand, are great for big ticket purchases, earning rewards or making ends meet between pay cheques (but remember, that shouldn’t be a long term solution!)

Which one is best will depend on your spending habits and what you want to get out of your piece of plastic. You may even decide to have one of both - a lot of people do - and use one or the other in different situations.

Find a debit card

If a debit card is for you, then the next thing you’ll want to do is head over to our comparison table, to compare debit cards side-by-side and see which one offers the best deal. If you need a little more info before you go ahead, read our guide on debit card fees and features.

Find a credit card

Think you might prefer a credit card? You can compare the options with our credit card comparison table, and check out some more info on what credit card is best for you in our credit card guide section.

Compare today's top debit cards