Credit Card Vs Debit Card | Difference Between Cards – HSBC UK (2024)

FAQs

Credit Card Vs Debit Card | Difference Between Cards – HSBC UK? ›

They work in the same way as using cash. Debit cards are used to spend money from your bank account. When you buy something using a debit card the money is taken out of your bank account and paid into the store's bank account. Credit cards are used to borrow money from the bank.

A debit card is linked to your bank account. It's usually your money that you're spending or withdrawing, unless you have an overdraft, which is a type of credit linked to your account. A credit card is a standalone account giving you access to a pre-agreed credit limit.

Debit cards are linked to the user's bank account and limited by how much money is in there. Credit cards provide the user with a line of credit that they can borrow against as needed and pay back later. Credit cards charge interest on the money the cardholder borrows (unless it's paid back within the grace period).

Bottom line. Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.

You can't tell whether a card is associated with a debit or credit account based on numbers alone. Still, you can usually find that out by looking at the card as most of them have a “credit” or “debit” label somewhere on the card.

Debits are incoming money and credits are outgoing money. In accounting and bookkeeping, debits increase assets and decrease liabilities, and credits increase liabilities and decrease assets.

Credit cards give you access to a line of credit issued by a bank, while debit cards deduct money directly from your bank account. Credit cards offer better consumer protections against fraud compared with debit cards linked to a bank account.

A debit card requires you to have the cash available in the account; a credit card does not. How is a debit card like a credit card? They both can have the Visa or MasterCard logo, and a debit card can be swiped and require a signature like a credit card.

What are two disadvantages of debit cards? ›

What's the difference? When you use a debit card, the funds for the amount of your purchase are taken from your checking account almost instantly. When you use a credit card, the amount will be charged to your line of credit, meaning you will pay the bill at a later date, which also gives you more time to pay.

Credit cards often offer better fraud protection

With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used. You could be liable for much more for unauthorized transactions on your debit card.

Debit and Credit Cards

UK shoppers use debit cards more often than any other payment method. Card payments (both credit and debit) made up 57% of the nation's transactions. Customers used debit cards in about 48% of all purchases.

MasterCard and Visa are among the most commonly used payment networks in Great Britain and the Continent. American Express, Discover, and Diners Club are less widespread, though some merchants will take them.

People typically spend more when using plastic than if they were paying cash.4 By using debit cards, impulsive spenders can avoid the temptation of credit and stick to their budget. This can help keep you out of high-interest debt.