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Credit Card vs Debit Card: What's the Difference and Which to Use?

Venus Zoleta

Venus Zoleta

Last updated February 08, 2024

Credit card vs debit card, which one should you use? You probably face this dilemma each time you open your wallet to pay for a purchase. 

Using a particular card in certain situations makes a huge difference. Keep reading this debit card vs. credit card guide to learn more.

Credit Card vs Debit Card: Similarities

Credit cards and debit cards have notable similarities, such as the following:

🔵 Appearance

On the surface, the two cards look identical. Both have a 16-digit card number and an expiration date on the front side. With these similarities, it’s easy to be confused about their main use.

🔵 Accepted Transactions 

You can use both cards to make online and offline purchases. For instance, you can also score those seat sales online with a debit card! 

When it comes to making offline purchases, both require a point-of-sale (POS) terminal to complete the transaction.

🔵 Cash Withdrawal 

You can also use both cards to withdraw cash from the ATM. However, note that withdrawing cash using your credit card usually involves heftier fees and operates under a different set of conditions. 

Credit Card vs Debit Card: Differences

difference between credit card vs debit card

What is the difference between credit cards vs debit cards? Check out the following:

🔴 Source of Funds

The key difference between a credit card vs a debit card lies in the source of funds. 

Using a credit card means you’re borrowing money from your issuing bank. The total amount you can spend depends on your credit limit. Since you’re borrowing from the bank, you’re expected to pay back what you owe by the due date.

When you use a debit card, on the other hand, you directly take money from your savings account. You can keep using your debit card as long as your bank account still contains funds. 

🔴 Fees and Charges

When it comes to credit cards vs debit cards, charges create a difference. Credit cards come with fees, such as annual membership, interest, penalties, and the like. 

Debit cards, meanwhile, won’t charge anything since you’re using your own money. The exception is when you withdraw from or check your balance at an ATM from a different bank or use it abroad.

🔴 Rewards and Privileges

Another difference between a credit card vs a debit card is the type of privileges each offers. 

With credit cards, you can enjoy an assortment of rewards, such as cashback, points, and miles. These are designed to encourage account holders to keep using their cards. 

Debit cards don’t come with the same privileges. Rewards, if any, are minimal and may come in the form of discounts.  

🔴 Ease of Acquisition

Credit card application typically comes with a rigorous vetting process. Banks require a certain income level, depending on the card. Your approval highly depends on the bank’s scrutiny of your financial history. 

Debit cards, meanwhile, are typically easy to acquire. Just meet the bank’s minimum deposit requirement, submit a few documents, and you’re good to go.

If you have a digital bank account, you can get a debit card for a fee. Employers also issue their employees a payroll debit card.

🔴 Fraud Protection

While both cards come with safety and security measures, credit cards may offer better fraud protection. Yes, unauthorized charges on credit cards add to your balance—nevertheless, you can correct this by reporting the unauthorized charges to the bank immediately. 

However, when a fraudster steals from your debit card, you lose actual money.

Read more: Get More Bang for Your Buck: 32 Best Credit Cards in the Philippines

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Best Uses of a Credit Card

Use a credit card for the following transactions:

🔹 Paying for Big-Ticket Purchases in Installments

Installments with 0% interest is a standard feature among credit cards. You can pay for your purchases in more manageable amounts for up to 36 months instead of making a one-time full payment.

This makes a credit card ideal for items you normally can’t pay for upfront in cash, such as gadgets, appliances, and furniture. In some cases, you can also use it to pay for the down payment of certain items.

Moreover, some credit cards offer purchase protection insurance, which reimburses the cardholder a certain amount for every damaged or lost item charged to their card. Others provide extended warranties, too.

Read more: Save More: Credit Cards with No Interest or the Lowest Interest Rate

🔹 Online Shopping

difference between credit card vs debit card - online shopping

The internet provides shopping convenience—but it isn’t a 100% safe place to shop. Using either a debit or a credit card for online purchases carries the risk of fraudulent transactions.

However, it’s what happens after an unauthorized transaction that makes all the difference. An unauthorized transaction charged to a credit card is easier to deal with. As mentioned, credit cards are safer to use [1] as they offer more protection against unauthorized transactions.

If a hacker uses your debit card without your knowledge, the amount gets deducted from your bank account right away.

🔹 Travel-Related Bookings

Using a credit card is a better way to manage your finances if you travel frequently.

With a credit card, you can book your travels without wiping out your savings account in one go. What’s more, you’ll enjoy travel perks such as air miles (which you can use to redeem free flights later), travel insurance, airport lounge access, and travel assistance.

But when you charge your travel expenses to your debit card, the amount is taken immediately from your account. Imagine how much will remain in your bank account if you’ve spent five-digit or six-digit figures for booking flights, hotel accommodations, tours, and other travel essentials. You might become short of money for your living expenses.

Read more: Best Travel Credit Cards with Airport Lounge Access, Miles, and More

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🔹 Travels Abroad

Other than using your credit card to book flights and hotels, you can use it as a spending tool when you’re in a foreign country. International credit cards branded with the Mastercard, Visa, or JCB insignia are universally accepted, so there should be no problem using them outside the Philippines.

You can conveniently use it at restaurants and tourist attractions. You can also earn some rewards points if you shop at partner merchants or shops.

Just remember that every purchase will be subject to a foreign transaction fee. Usually, the fee ranges from 1% to 3%. On top of that, you’ll also be charged with a 1% assessment fee.

🔹 Paying for Bills and Other Recurring Charges

It’s easy to forget due dates if you’re paying in cash or with a debit card. However, a credit card’s auto-debit arrangement feature helps you automate payment for bills and other recurring charges such as insurance premiums. This way, you avoid missing a payment and the hassles that come with it.

Plus, it’s easy to pay bills nowadays, thanks to mobile apps that accept credit card payments.

🔹 Getting Rewards and Promos

Credit card companies usually team up with select shops, restaurants, and gasoline stations nationwide to offer promos to entice cardholders. If you love eating out or usually gas up using cash, consider using your credit card next time. Common credit card perks include exclusive discounts, cashback, rebates, and even airline miles.

If you want to enjoy the rewards and promos offered by your credit card issuer, then it makes more sense to use your credit card for purchases that qualify for those perks. But be sure to pay the full balance—not just the minimum—every month, so you can continue to avail of credit card rewards and promos.

Read more: Best Credit Cards for PAL Mabuhay Miles, Cebu Pacific GetGo Points, and airasia points

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🔹 Building a Good Credit History

If you’ve never taken out a loan, you need to establish a positive credit history so you can easily get approved in the future

Using a credit card responsibly is a great way to boost your credit score and make you creditworthy in the eyes of banks and other types of lenders. The bank reports your credit card payment history, credit utilization ratio, and the age of your credit card account to credit bureaus.[2] Such data is used to compute your credit score.

In contrast, debit card transactions aren’t included as criteria for determining a person’s credit score.

🔹 Paying Off Debts

Using your credit card to settle some of your debts may sound like a counterintuitive piece of advice. After all, conventional financial wisdom tells you not to deal with debt with another form of debt. But there’s a strategy that you can use to avoid paying high interest rates: do a balance transfer.

Balance transfers are technically a debt consolidation method. Using this technique, you’ll be able to transfer your high-interest credit card debts to a new credit card with a lower interest rate or even a 0% interest rate. When you avoid high-interest charges, you’ll be able to reduce the overall amount of your debt.

Just a word of caution: the lower monthly add-on rate or 0% interest feature of new credit cards are usually offered as promotions. After the promo period ends, regular rates, which may be higher than that of your previous credit card, will apply. As such, try to pay off the consolidated debts before the promotional period ends.

🔹 Emergencies

It’s wise to set aside an emergency fund to cover unforeseen expenses. But in case your rainy day savings aren’t enough, you can always tap into your credit card. Use it to pay your rent, hospital bills, and tuition fees if you’re cash-strapped. 

Just make sure you can pay them off afterward.

Best Uses of a Debit Card

What should you use your debit card for? Here are some of its best uses.

🔸 Everyday Purchases

difference between credit card vs debit card - everyday purchases

If you compare a credit card vs a debit card, the latter is safer to use for small purchases such as groceries and medicines. Because you’re using your own money, you become mindful of your spending and stick to your budget. 

Moreover, you can easily track your expenses since every transaction is recorded in your mobile banking app  (if you’ve connected your debit card to the app).

🔸 Withdrawing Cash

ATM withdrawals are cheaper with debit cards compared to credit cards. When you withdraw money using your debit card, it’s free of charge if you use the ATM of your issuing bank. Withdrawing cash from an ATM of another bank will incur a minimal service fee between ₱10 and ₱18 per transaction.

🔸 Controlling Bad Spending Habits

Do you often splurge and max out your credit card, ending up with an unpaid credit card balance each month? It’s a sign that you’re having problems with credit card use. It’s time to curb that bad habit. 

To avoid drowning in debt, it’s better to use your debit card until you’ve developed financial discipline. Unlike a credit card, a debit card makes it impossible for you to spend money you don’t have.

🔸 Transferring Money  

Gone are the days when you had to go to the bank to deposit money into another person’s account. Because banks these days have their own mobile apps, you can easily transfer funds using your computer or smartphone. Just make sure that your debit card is registered in the app.

If you’re outdoors and you need to transfer money ASAP, you can do so via the ATM.

🔸 Avoiding Unnecessary Charges   

If you don’t settle your credit card balance in full, you’ll have to pay off interest charges. And the longer your payment term is, the longer you’re required to pay off the interest. On top of that, you may find yourself paying other charges, such as the late payment fee, overlimit fee, charge slip fee, and annual fee.

You won’t need to cover these expenses when you use your debit card since you’re using your own money.

Read more: Earn Cashback and Points With the Best Credit Card for Groceries

Summary: Differences Between Credit Card vs Debit Card

To clearly understand credit card and debit card differences, check out this infographic:

difference between credit card vs debit card - summary

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Credit Card vs Debit Card: FAQs

If some things still confuse you, this section answers your burning questions:

1. Can a debit card be used as a credit card? 

You can use a debit card similarly as a payment method. Pay for your purchases via a shop’s POS terminal or an online store’s checkout page. 

However, keep in mind that your debit card doesn’t have a credit line. The funds deducted from your card are from your personal savings account. 

2. How to identify a credit card vs a debit card? 

Credit card and debit card differences aren’t always obvious. You can confuse one for the other since they look the same.

But upon closer inspection, you’ll see a minor but obvious difference between a credit card vs a debit card. Debit cards usually bear the word “debit,” allowing you to tell them apart. 

3. Is a prepaid card the same as a debit card?  

A lot of people use the terms “prepaid card” and “debit card” interchangeably. After all, both run on personal funds. In reality, they’re different from each other. 

A debit card is linked to a personal bank account. A prepaid card, on the other hand, isn’t linked to any savings account. For it to have funds, you need to load money into it. 


4. Do all credit cards earn points? 

While credit cards are known for rewards, such as cashback and points, not all of them earn privileges. This is especially true for entry-level credit cards with low credit limits. 

5. Do all credit cards have annual fees?

Not all of them do. Some starter credit cards may not charge annual fees forever. Banks and partners, such as Moneymax, may offer promos where applicants can avail of a card with no annual fees for life.  

6. Is a credit card for me? 

This is one question you should ask yourself before applying for a credit card. It largely depends on how you handle your finances. If you can’t control your shopping impulse, you and a credit card may make a bad combination. 

Before you get a credit card, gauge how well you handle your finances with your debit card. Once you develop self-control and discipline, consider getting a credit card. 

Read more: How to Choose a Credit Card Based on Your Needs and Lifestyle

Final Thoughts

Now that you know the credit card vs debit card differences, the next thing you need to do is to determine which card is right for you. Both are useful spending tools. But for you to make the most of them, you need to evaluate your lifestyle, spending habits, and usual purchases.

In case you do decide to get a credit card, it’s important to compare options. Moneymax can help you out with that. Through our free comparison tool, you can compare various credit cards from the leading banks in the Philippines. 

Want to get started? Click the banner below! 

Compare credit cards with Moneymax


Venus has almost 20 years of combined experience in content marketing, SEO, corporate communications, and public relations. Most of her career was spent creating informative articles on personal finance and digital marketing. She also invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Venus graduated cum laude with a Journalism degree from the University of the Philippines Diliman. A hardcore Hallyu Tita, she loves bingeing Korean shows on Netflix while bonding with her cats. Follow Venus on LinkedIn.


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