Could you carry a debit card instead and leave your credit card at home? Could you even cancel that credit card altogether?


Let’s face it, easy access to credit is extraordinarily handy and credit cards provide us with instant access to a line of credit.


Credit is useful. It allows us to juggle cash flows, to make purchases when we need to rather than when our paychecks come in. 


But for some of us instant access to credit can be a problem, either because we just can’t resist that new bargain, or because we’re struggling to make ends meet. 


Either way, instant credit is like fire: “a wonderful slave but a terrible master”.

If credit cards are a problem for you, could you get by with a debit card instead?


Debit cards access the Visa or MasterCard networks to offer all the convenience of making payments with a card… minus the debt. So when you use a debit card, it takes money from your account to pay for purchases.

Debit Card Vs Credit Card – Areas to Look


Here are some areas to look into in choosing one type of card over the other. 

Financial Purpose 


Credit cards are basically lines of credit. You borrow money with your credit limit in agreement with your card issuer. You can pay the loan in full or in installment but there will be charges and fees, so always be mindful of your due dates. 


With a debit card, your limit is your actual money in your bank account. Because you already own the money, you are not taking a loan so this is a safer option if you want to limit your spending. 




Most debit cards in Australia have no fees or very minimal fees. 


Credit cards usually charge annual fees, late payment charges, overdraft fees, and other fees and rates, on top of monthly interest rate on your outstanding balance. 




Credit card users can enjoy better flexibility because it is easier to pay for products and services even without the cash on hand. 


And by theory, you have an unlimited amount of time to pay back that money but you’ll incur interest and you have to pay a minimum each month to avoid card suspension. 


However, this flexibility also comes with major drawbacks. People tend to make poor buying decisions because of the lack of pressure to pay the loan and the convenience of swiping the card. 


Then if you are unable to pay off the card, you need to pay high interest on the balance, and in due time that interest can shoot up. 

Credit Rating 


Australian banks will usually look into your credit card limit in evaluating your credit rating. 


Meanwhile, debit card transactions are not included in the standard credit history assessment. 


So, if you are trying to build your credit score, maintaining at least one credit card and working your way towards a higher limit can help you qualify for numerous financial products such as mortgage, business loans, etc. 

Perks and Rewards 


Credit card users can enjoy rewards program that offer perks such as travel points, discounts, freebies, and other perks. 


Some card companies offer added warranties for items bought using credit cards instead of paying retailers for extended guarantees. 


In summary, credit cards offer:

  • Better flexibility 
  • Convenience
  • Rewards 
  • Credit building 


In summary, debit cards offer:

  • Flexibility –  withdraw cash, pay for EFTPOS transactions or make remote payments over the internet or telephone.
  • Zero interest charges.
  • Zero debt – as you only access your own cash you can’t accumulate debt.
  • ATM access –  withdraw cash from your institution’s ATM without fees.
  • Security – if your debit card is stolen or lost, you know that only the amount of money in your account is at risk, and you can limit this by having a separate online savings account.
  • Some debit cards linked to your shopping accounts also provide fraud protection for online purchases similar to that offered by credit cards.


If you are confident that you are in control of your spending, then you can take advantage of the benefits offered by credit cards. 


Otherwise, you should consider the fact that cash withdrawals from your credit account are expensive and instead use your debit card. 


But if you are still struggling with your spending behaviour, and you don’t like the idea of paying for a plethora of fees, a debit card can help you avoid spending too much on items that you can live without.  

Join the trend


Debit cards are now the most common payment option in Australia.


RBA statistics for 2021 shows 35 million debit cards are in circulation in the country with an average value of $46 per transaction (Statista). 


This trend signifies that Australians are now embracing debit cards in paying for their purchases instead of using the traditional credit card system. 


Some study shows that millennials are more likely to ditch credit cards and instead use cards that are linked to their bank or checking accounts. 

The Rise of Alternative Payments 


While the subject of this blog is about credit card vs debit card, it is worthy to note that there are emerging alternative payment options that are now very popular in Australia. 


One strong contender in the retail market is Afterpay, which primarily offers an installment based payment method. 


By using Afterpay, you can buy a product and pay for it in four installments. 


For instance, you walk into a computer store and like a tablet worth $300 that you can pay using your credit card or debit card. 


Or, you may choose to “Afterpay” the gadget to pay four installments of $75 each. You can bring home the device, and keep paying until the total amount is covered.


Another rising payment option now is Zip, which allows you to pay off products also in installments. 


The repayments can be monthly, fortnightly, or weekly as long as a minimum payment is made for balances under a certain amount.


Both Afterpay and Zip are considered as strong competitors of card companies because they are projected to grow exponentially in the next few years.  





Do you think you could leave your credit card at home? Or do away with it altogether and use new payment platforms instead? Is there anything else you’d like to know about credit or debit cards?


Join the conversation — leave a comment below and let us know what your thoughts are.


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