Is paying by credit card better than a debit card?

29 November2010

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Credit cards are one of those things that just make life that little bit easier. They enable us to spend money we don`t have yet; they give us something to fall back on in a financial emergency. Some can even be useful for repaying debt (e.g. a 0% balance transfer credit card).

However, isn`t it always better to spend on a debit card if you can? All debt can cause problems if you struggle with your repayments, whereas a debit card only usually allows you to spend money you already have.

But this doesn`t always mean spending by debit card is safer - and here`s why.

When are debit cards better?

A debit card might be considered safer in general because by not getting into debt, you`re minimising your risk of financial problems. Restricting your spending to a debit card automatically ensures you have to save up for all your purchases (unless you have an overdraft), which is a sensible way to manage your finances if you don`t mind waiting for things.

Debit cards also don`t charge interest on purchases (unless you`re overdrawn), so they`re almost always cheaper to use than credit cards.

When is a credit card better?

If you`re looking to manage your finances safely, you may want to keep a credit card for financial emergencies, and do all the rest of your spending with a debit card. This minimises the risk of debt problems while ensuring that you have good protection against anything unexpected that could come up.

However, in some respects a credit card can actually be safer than a debit card for day-to-day spending. All credit card purchases over £100 are protected under the Consumer Credit Act, meaning that if your purchase is incomplete or not as described, you should be able to claim the money back from your credit card provider. For example, if you book a flight on your credit card that is later cancelled and no suitable alternative is provided, you`ll get the cost of the ticket refunded.

For this reason, if you are completely confident in your ability to repay your balance on time, it may be a good idea to put all your non-essential spending on your credit card. To make this completely foolproof, make sure you have budgeted for your credit card repayments in advance so that you can meet them in full at the end of each month.

Compare credit card deals with our free online credit card comparison table.

Review our latest credit card best-buys

Product	Transfer rate & period	New Purchases rate & period	Representative APR
Barclaycard Platinum Credit Card with Extended Balance Transfer	0% 26 mths 3.5% Fee	0% 6 mths	18.9% (variable)
	Representative example: With this credit card the representative APR is 18.9% (variable) based on an interest rate of 18.9% (variable), transfer fees of 3.5% and a credit limit of £1200.
Barclaycard Platinum Credit Card with Balance Transfer	0% 25 mths 2.8% Fee	0% 6 mths	18.9% (variable)
	Representative example: With this credit card the representative APR is 18.9% (variable) based on an interest rate of 18.9% (variable), transfer fees of 2.8% and a credit limit of £1200.
Tesco Bank Clubcard Credit Card for balance transfers	0% 25 mths 2.9% Fee	0% 3 mths	16.9% (variable)
	Representative example: With this credit card the representative APR is 16.9% (variable) based on an interest rate of 16.9% (variable), transfer fees of 2.9% and a credit limit of £1200.
Halifax Balance Transfer Credit Card	0% 25 mths 3% Fee	0% 3 mths	18.9% (variable)
	Representative example: With this credit card the representative APR is 18.9% (variable) based on an interest rate of 18.95% (variable), transfer fees of 3% and a credit limit of £1200.
NatWest Platinum	0% 24 mths 2.9% Fee	0% 6 mths	17.9% (variable)
	Representative example: With this credit card the representative APR is 17.9% (variable) based on an interest rate of 17.95% (variable), transfer fees of 2.9% and a credit limit of £1200.
Royal Bank of Scotland Platinum	0% 24 mths 2.9% Fee	0% 6 mths	17.9% (variable)
	Representative example: With this credit card the representative APR is 17.9% (variable) based on an interest rate of 17.95% (variable), transfer fees of 2.9% and a credit limit of £1200.
MBNA Platinum Credit Card	0% 23 mths 2.5% Fee	0% 3 mths	16.9% (variable)
	Representative example: With this credit card the representative APR is 16.9% (variable) based on an interest rate of 16.9% (variable), transfer fees of 2.5% and a credit limit of £1200.
Fluid Balance Transfer Card	0% 23 mths 2.89% Fee	0% 3 mths	16.9% (variable)
	Representative example: With this credit card the representative APR is 16.9% (variable) based on an interest rate of 16.9% (variable), transfer fees of 2.89% and a credit limit of £1200.
MBNA Credit Card	0% 22 mths 2% Fee	0% 3 mths	16.9% (variable)
	Representative example: With this credit card the representative APR is 16.9% (variable) based on an interest rate of 16.9% (variable), transfer fees of 2% and a credit limit of £1200.
Lloyds TSB Platinum MasterCard	0% 21 mths 1.5% Fee	0% 3 mths	17.9% (variable)
	Representative example: With this credit card the representative APR is 17.9% (variable) based on an interest rate of 17.95% (variable), transfer fees of 1.5% and a credit limit of £1200.
Nationwide Building Society Credit Card	0% 20 mths 1.55% Fee	0% 3 mths	15.9% (variable)
	Representative example: With this credit card the representative APR is 15.9% (variable) based on an interest rate of 15.9% (variable), transfer fees of 1.55% and a credit limit of £1200.
We provide a representative range of products on competitive terms and do not act exclusively for any credit provider. Credit limits may vary depending on your circumstances.

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