The number of debit cardholders reduced by 34.4 million as of December 2018, while the number of credit cardholders went up by 0.98 million within the same time. Resultant, the total amount transacted through credit cards at POS terminals has surged by Rs.2617 crore until December 2018, while through debit cards, such amount reduced by Rs.900 crore.

Financial experts consider growing awareness regarding the benefits of a credit card over debit cards as a crucial factor for such a rise in demand. There are other factors to consider when utilising credit card vs debit card.

These are –

1 . Reward points

Individuals can enjoy several customer loyalty programmes with credit cards. Card issuers institutionalise such programmes as a measure to encourage individuals to responsibly and regularly use their cards to make various purchases. Through these programmes, customers can earn reward points which they can redeem for discounts, vouchers, and offers with different associated organisations and institutions.

In the case of debit cards, individuals cannot earn reward points, and such benefits are limited to purchase discounts, etc.

2. Better manage expenses

Individuals can view the transactions or purchases made through their credit cards via monthly statements. Individuals can accordingly regulate their expenses to avoid overspending or exceeding the credit limit beyond a certain point. It allows them to be more responsible with their expenses.

Debit cards do not have such statements. You can view expenses made through the debit card via your account passbook.

3. Credit score enhancement

When individuals use a credit card responsibly, it positively affects their credit score. Using a credit card for a long time also develops a substantial credit history which is further reflected in an individual’s credit score. Improved credit score also allows individuals to avail high-end cards such as the Bajaj Finserv RBL Bank SuperCard.

4. Handle bigger expenses conveniently

Individuals are provided with the option to convert any large expense they have made using a credit card into EMIs. It allows individuals to avoid any financial strain and repay conveniently without affecting their financial position. Debit cards do not have such an option.

5. Secure

Credit cards are a more secure option compared to debit cards in cases of card frauds and thefts. A fraudulent transaction on a debit card is immediately credited from the available funds in the linked account. For credit cards, you can report a fraudulent transaction and avoid the financial repercussions as the finances utilised are that of the card issuer.

There are also different types of credit cards which are designed to meet individual expense patterns. Maintain a CIBIL score around or above 750 to avail the most beneficial terms and features on a credit card.

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