Although they look virtually identical and are both forms of payment, there are a number of big differences between credit and debit cards. These differences can affect the way your money works for you with different benefits offered by each one – but which is best for online use?
In 2013, Britain was expected to spend a record £87 billion on online shopping with many of those payments being made by credit and debit card.
Below we have taken a look at which is easiest to use and why:
Both credit and debit are perfectly suitable for almost all online transactions – providing you have enough money in your account and enough credit on your card.
When using your credit card you may incur interest charges on the money you have borrowed. This means that if you are making lots of small purchases, it might be better to use a debit card as you will pay no interest.
If you are making a larger transaction and don’t want to empty your current account, it might be better to use your credit card and pay the money back in instalments.
When using your credit card, you can also earn extra rewards depending on your provider. Some deals offer cashback of up to £100 on certain purchases. You can also accrue points that can be exchanged for goods and services.
In many cases, the interest on purchases remains at 0% for an initial period after the purchase date. After this, you will need to pay off the balance or start accruing interest.
Most banks and card providers insist that both debit cards and credit cards are extremely safe to use online. It is unlikely that anyone can access your details and use your money or cards to make purchases but it does occasionally happen so it is best to be vigilante and keep an eye on your accounts.
Credit cards are protected under the Consumer Credit Directive meaning your card provider is jointly liable with the supplier for any purchases you make. That means that should you pay for a holiday with an operator who is later declared bankrupt, you won’t lose all your money.
As long as your purchase costs between £100 and £60,260, you are covered by this agreement. The same cannot be said for debit cards.
These days, a lot rests on your credit rating. The ability to apply for loans and mortgages successfully depends on your credit score which proves your ability to pay money back.
Using your credit card online can help to build this score and make you more financially viable in the future but only if you make your repayments on time. If you’re concerned about your ability to do this, a debit card might be the wiser choice.
In short, both types of card can be very useful when making online purchases – the trick is to choose the best card for the situation.
Simon writes for Payzonecards, a leading provider of UK card payment terminals. He covers a wide range of topics including topical articles and electronic payment and card related blogs