Here’s an overview of the key differences between credit and debit cards.
A debit card is linked to your transaction account
A debit card is linked to youreveryday transaction account,so whenever you pay for something, the money is taken from the 'available funds' in that account.You don’t have to pay interest on purchases made with your debit card (unless your debit card account becomes overdrawn).
A credit card allows you to pay for purchases using an approved line of credit, which you'll have to pay back in the future, possibly along with some interest too.
How it works
When you pay using your debit card (tap or insert then enter a PIN if required), the merchant lets us know in advance how much you 'owe' them. The payment won't go through if you don't have enough money in your account.
While you can tap to pay for your morning coffee and start sipping it immediately, this payment check by merchants may not be instant. That's why some transactions appear as pending when you check your account balance, until the payment is fully processed.
Read more aboutpending transactions.
Available funds vs account balance
When you pay for something on your debit card, the amount you owe the merchant may be marked as pending. The amount is always deducted from your available funds, not your account balance.
Your account balance doesn’t take into account any pending transactions, cheques or amounts that haven’t cleared, so it may not be a true reflection of what you have available in your account.
So, if you want to know how much money you really have in your account, look at your available funds.
Should you use a debit or credit card?
It depends how you want to manage your money. Some people prefer to only spend what they have in their account, while others use a credit card to help with cashflow, pay for large purchases, or to collect credit card reward points.
Others use a combination of both cards to manage their money.
Whatever your preference, it's important to keep on top of your spend – particularly on your credit card, to make sure you don't miss anyrepayments and to reduce any interest you may have to pay.
Tips to help you manage your money
Using the CommBank app and NetBank, you can easily keep track of how much is in your account and what you're spending:
- Check your balance at any time.You can even check your balance from your home screen on the app by adding Simple Balance as a favourite.
- TurnTransaction Notificationson and we'll tell you instantly when you pay or are charged for something on your CommBank debit or credit card
- Spend Trackercategorises every debit and credit card transaction, making it easier to see where you spend your money
- Lock and unlock contactless debit card payments, online and in-store international payments in the CommBank app when you need to. This extra security also means you can block your CommBank debit card in NetBank and the CommBank app if you suspect you're a victim of a scam or fraud.
FAQs
When you open a checking account at a bank or credit union, you usually get a debit card. A debit card lets you spend money from your checking account without writing a check. When you pay with a debit card, the money comes out of your checking account immediately. There is no bill to pay later.
What is the difference between a debit and a credit card? ›
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).
Why would anyone use a debit card? ›
Most retailers, venues, and other providers accept debit cards, making them an easy way to complete purchases without having to carry around cash or a checkbook. You can also access funds and make withdrawals from an ATM without making a trip to the bank.
What are the disadvantages of a debit card? ›
Some ATMs will charge withdrawal fees, and if you use more than the agreed overdraft limit then the fees tend to be much greater than those incurred by credit card usage. Another disadvantage of debit cards is the fact that they have limited funds, which can slow down business.
Can someone use my debit card without my PIN? ›
Fraudsters can still use your debit card even if they don't have the card itself. They don't even need your PIN—just your card number. If you've used your debit card for an off-line transaction (a transaction without your PIN), your receipt will show your full debit card number.
Is it smart to have a debit card? ›
Debit cards come with both benefits and drawbacks. Debit card advantages include flexibility, security, and the ability to use them almost anywhere. Debit cards can help some consumers manage money. Debit card cons include a lack of features, such as cashback rewards and additional protections.
Why do people use debit cards instead of credit? ›
Avoid Debt
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.
Can I run my debit card as credit if I have no money? ›
If you don't have enough funds in your account, the transaction will be declined. When you choose to run your debit card as credit, you sign your name for the transaction instead of entering your PIN. The transaction goes through Visa's payment network and a hold is placed on the funds in your account.
Is it better to pay with a debit card or a bank account? ›
Debit cards and checking accounts are important financial tools that work together to help you easily manage your money. Debit cards offer some advantages, such as faster transaction processing and added security, making them a convenient option for everyday use.
When should you not use a debit card? ›
Popular tourist locations. It's easy to fall for tourist traps when on vacation — common tourist areas make for popular skimming targets. A simple way to lessen the risk of being scammed while on vacation is to use a credit card instead of a debit card.
A debit card doesn't offer the same fraud protection
If a stranger were to find your debit card, they could essentially use all the money in your linked checking account. While you can get your money bank when you report debit card fraud, it may take time or you may not be reimbursed at all.
Is it risky to have a debit card? ›
Using a debit card opens up the possibility that the thief will gain access to the funds in your checking account. Protections are in place if a debit card has been lost or stolen and used fraudulently, but only if you notify your banking institution.
Why do people not like debit cards? ›
With a debit card, the money is already gone from your checking account, and you're trying to get your own money back. Debit cards are more vulnerable to fraud than credit cards, according to the Identity Theft Resource Center in California, a nonprofit consumer education organization.
Do debit cards hurt your credit? ›
Debit cards do not appear on your credit history or affect your credit score. When you use a debit card, the money is immediately taken out of your banking account. You are not borrowing money like you would with a credit card.
Is it better to have a credit or debit card? ›
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.
Does a debit card charge a fee? ›
The 3 types of fees usually charged on every debit card transaction are interchange fees, assessments, and processor's markup fees. Interchange fees are charged by the bank that issued the debit card to the customer. Card companies, like Visa or Mastercard, charge the assessments.
How much does it cost to get a debit card? ›
Debit cards come free with most checking accounts, but you might have to pay a minimum deposit in order to open the account itself.
What is the difference between a bank card and a debit card? ›
An ATM card is a PIN-based card, used to transact in ATMs only. While a Debit Card, on the other hand, is a much more multi-functional card. They are accepted for transacting at a lot of places like stores, restaurants, online in addition to ATM.
