Top of main content

The differences between a credit card and debit card

While you can use both a credit and debit card to pay for purchases and even take out cash, understanding their uses could save you money.

We'll show you the difference between credit cards and debit cards so you'll know when it's better to use one over the other. 

How to use a credit card

When you buy something using your credit card, you're borrowing money from your credit card provider to repay later. You may then be charged interest on what you owe if you don't clear your balance in full each month.

You're able to spend up to a certain amount on the credit card. This is known as your credit limit. 

You'll get a monthly statement from your credit card provider, and this will list all your transactions. And, if you've spent money on the card, you'll be asked to pay the minimum amount towards your balance each month to avoid credit card charges.

How to use a debit card

When you use a debit card, you're spending your own money. The money automatically comes out of your bank account and you won't be charged interest to use it.

Keep in mind – if you make a withdrawal, or purchase, that takes you below your available balance in your bank account, you'll go into an overdraft and may be charged interest.

Credit card uses

If you're able to pay off your debts without being charged interest, using a credit card has some advantages over a debit card.

Purchase protection

With a credit card, you can spread the cost of big purchases. It also gives you more purchase protection than a debit card.

A chargeback – or refund request – is a credit card feature that protects consumers from fraudulent transactions, or even purchases they're unhappy with. In addition, merchants are not allowed to store a cardholder's personal details, making transactions even safer.

Unlike a debit card, a credit card is not connected to your bank account. And if you are to lose it, or you suspect credit card fraud, you might find that your card comes with fraud protection and lost card liability.

Travel arrangements

Some hotels, airlines and hire car companies may only accept credit cards for reservations and bookings. Your card's chargeback feature will protect you if you need to file a dispute claim with one of these merchants.

Attractive rewards programme

Credit cards that offer rewards, such as cashback and frequent flyer points, are some of the most popular. Every time you spend money, you'll earn points. These can be exchanged for rewards, such as dining, shopping vouchers and flights, as well as discounts on fuel and family days out. The more you spend on the card, the more you can save – as long as you always clear your balance each month.

Boost your credit rating

Using credit regularly, staying under your credit limit and paying off your balance in full each month helps to improve your credit score. Having a good score shows lenders you're responsible at repaying debt, which is important if you ever want to apply for a mortgage, or take out a loan. 

Advantages of using a debit card

Anyone who has a savings account will usually be issued a debit card, too. A debit card gives you quick access to your funds and enables you to pay bills, shop and check your balance. So when should you use it instead of a credit card?

It's easy to get cash out

One of the main differences between a credit card and a debit card is that you should always use your debit card to withdraw money from an ATM. Most banks will give you a few free ATM cash withdrawals before they start charging a fee. If you're an HSBC customer, cash withdrawals at HSBC ATMs and other banks' Visa ATMs in India are free of charge.

Your credit card should only be used for emergencies if you need a cash advance. You'll not only incur fees when you withdraw money, you'll also be charged interest on that money, even if you repay your balance as soon as possible.

Select HSBC Credit Cardholders can apply for the HSBC Cash-on-EMI feature. This give you a convenient way to borrow cash and repay in installments at a lower interest rate.

You won't be tempted to overspend

A debit card is versatile and simple to use. It allows you the convenience of paying for your purchases directly from your bank account, without having to carry much cash. And because the debit card is linked to your bank account, you can easily keep track of your spending online or through mobile banking.

But the best thing about a debit card is that, unlike a credit card, it's harder to rack up a serious debt. You can only spend what's in your account. Use your debit card for your day-to-day banking and save your credit card for when it's needed most (like a well-deserved holiday!).

You might also be interested in

Our step-by-step guide on how credit cards work and how to make the most out of them.
If used wisely, transferring your credit card balance can be a good way to manage your debt.
We outline some of the ways in which you can boost your score for better borrowing.


This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC), India, Incorporated in Hong Kong SAR with limited liability, for the information of its customers only. This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe to any product / investment. The information herein is derived from sources believed to be reliable and the concerned Information Provider(s) have duly authorized HSBC to use such information provided by them. Whilst every care has been taken in compiling the information, HSBC and the concerned Information Provider(s) do not guarantee, or make any representation or warranty and accept no responsibility or liability as to its accuracy or completeness and shall not be liable for damages arising out of any person's reliance upon this information or any action taken or not taken as a result of any material contained in the publication. Expressions of opinion are those of HSBC and the Information Provider(s) only and are subject to change without notice. HSBC has not independently verified any information provided by the Information Provider (s) or that has been derived from the sources believed to be reliable by HSBC. Opinions expressed herein do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this publication. This document is for circulation in India only. No part of this publication may be reproduced or stored in a retrieval system without the prior written permission of HSBC. Any liability is accordingly expressly disclaimed by HSBC, its officers, directors and employees.