Credit Card vs Debit Card: Which is Better for Online Shopping?

Credit Cards are financial instruments that enable us to make purchases based on credit. This credit is given by the banks or financial institutions that issued the cards. This credit is relatively for a short term as one is required to pay back the amount at the end of the credit cycle at a pre-fixed date every month. You do have an option to defer the payment with extra charges or opt to pay in equated monthly installments (EMI) for a fixed tenure. Hence no wonder this has gained immense popularity as compared to a debit card.

A debit card is an ATM card that allows one to make over the counter transactions and online purchases and payments directly from the bank account. So the amount you can spend on a debit card is equal to your bank account balance. This card also offers some reward points, but they can be hardly compared with those of a credit card.

While a debit card is provided to every bank account holder, the issuance of a credit card is bound to some conditions. The customer must be a salaried employee or have a business with regular income, should have a good credit score, and a few other criteria. The credit limit is also set by the bank or financial institution depending on your income level. Untimely payment of loans and credit bills have an adverse effect on your credit ratings. So there is a lot that goes into consideration before a credit card is issued.

Credit Card vs Debit Card: Which is Better for Online Shopping?

Use the best credit card for online shopping and reap huge benefits! Image Source: freepik.com

Both cards offer the facility of domestic and international online transactions. With the exponential rise in digital payments, the use of cards for internet transactions has gained a huge traction. Compared to net banking, which requires the bank to authorize every merchant for a transaction and is painfully slow, credit and debit cards offer easy payments through an OTP authorization by the customer. This rise in digital payments has also boosted e-commerce, as more and more people shop online every day. Groceries, medicines, food, clothes, electronics, equipment, entertainment, almost everything can be ordered or purchased online. For all these types of purchases and more a credit card offers certain advantages over a traditional debit card:

Rewards and Bonuses

Most credit cards provide incentives to customers for transacting at partner websites and outlets. Almost all major e-commerce websites have partnered up with banks and financial institutions to offer exclusive credit cards which amplify your reward points when shopping on their respective sites. These reward points are redeemable for cash, or products available on their points redemption page. Certain websites offer a considerable discount when making purchases through certain credit cards. Depending on your purchase behavior, you should opt for the best credit card for online shopping.

Such huge incentives are rarely present in Debit Cards.

Option of EMI

A major reason why credit cards are so popular is because of the EMI feature. It allows you to pay the bill on a credit card in equated monthly installments, paying off both the principal amount and the interest on it. The EMI feature is available on most credit cards, with some e-Commerce websites offering no extra charges on opting for this payment method. A little point to note here is that an IGST is charged on the services offered by the credit card when you opt for EMI.

The benefit of purchasing through EMI are many. It helps in better management of finances and an easy way to purchase costly goods or products, which would otherwise take a long time. The no-cost EMI schemes for certain products only adds to it.

Security and Fraud Protection

The feature which distinguishes a credit from a debit card is also the reason why possibly it is much safer to shop online using a credit card. Your own money is not at stake here, it’s your credit limit. In the case of fraudulent transactions, you can report it to the bank or financial institution, who in turn will investigate the matter and deal with it. Your bank account is still safe and you would have saved all your funds. The liability lies with the bank to recover the funds and reinstate the credit limit for verified fraudulent transactions.

In addition to this, there are some card protection plans on credit cards by which the credit card holder is insured for a said amount in case of card theft and misuse.

The Reserve Bank of India has put forth some guidelines regarding fraud and theft. The revised guidelines state that a customer has zero liability if there is a contributory fraud or negligence from the bank that resulted in a financial loss to the customer. In case of a 3rd party breach, if neither the bank or the customer is at fault, and if the customer notifies the bank within 3 days of receiving fraudulent transaction alert, then the customer will not be liable. The liability of a customer is capped to INR 25,000 if the customer notifies the bank about the unauthorized transactions within seven days.

For all the above-stated reasons and more, it is quite evident that a credit card is simply more advantageous and secure. To get the best out of your spendings, choose the best credit card for online shopping which provides you with the maximum benefits.