Get the Finder app 🥳

Track your credit score, free


How is a debit card different from a credit card?

While a credit card is linked with a line of credit, a debit card is connected to your savings bank account. You can learn more about the differences in this guide.


Fact checked
Couple shopping online with pet pug sitting on one of their laps.

Speed, security and convenience have made paying with plastic the preferred option for most Australians. In 2019, combined credit and debit card purchases increased to 9.4 billion per year according to research from Finder. While there was a roughly equal number of transactions on debit cards and credit cards in the mid-2000s, debit card use now makes up around 69% of all card spending. That's about 6.5 billion transactions per year compared to 2.9 billion per year made with credit cards.

They're both popular options, but what's the difference between a debit card and a credit card? You can use this guide to compare the similarities and differences between the two and decide which one is right for you.

Credit cards vs debit cards at a glance

Credit cards

  • Line of credit
  • Most cards charge an annual fee, as well as interest if you carry a balance
  • Many credit cards offer rewards and perks like travel insurance
  • Typically attract a higher surcharge/card payment fee

Debit cards

  • Your own money
  • Many accounts have $0 monthly or annual fee options
  • Less risk of debt or additional charges, compared to credit cards
  • May offer a lower or $0 surcharge/card payment fee

Credit cards

You can use a credit card to spend up to a set amount of funds (your approved credit limit). You're required to pay vack what you've charged to the card. If you don't pay off your card in full by the statement due date, you'll usually be charged an interest rate. Some cards also charge an annual fee. On top of these account costs, credit card surcharges can range from around 1% to 2% of the transaction value, compared to around 0.5% to 1% for debit cards. Learn how to avoid surcharges with Finder Fee-Free Shops.

When you apply for a credit card, this is listed on your credit report whether or not you're approved. If you use your card responsibly and make timely repayments, this can help improve your credit score.

On the other hand, credit cards are a popular way to free up cashflow and earn reward or frequent flyer points on your everyday spending. You can also get credit cards with perks such as complimentary overseas travel insurance and airport lounge passes and concierge services that can help with travel, dining and entertainment bookings (among other things).

What about security?

Most credit cards offer 24/7 fraud monitoring services to help protect you against suspicious activity. If someone uses your card for fraud, the transaction amount will be refunded under a zero liability policy. If your card is used to make a fraudulent transaction, it won't impact your bank balance or savings.

Debit cards

Debit cards are linked to your everyday bank account and you're spending your own money. This means they don't attract interest charges. Most everyday bank accounts that offer debit cards also offer $0 account fee options, meaning you can often use a debit card without paying any extra costs.

It also costs merchants less money to process debit card payments, which is why there is often a lower surcharge compared to credit card transactions. One key detail to note: for tap-and-go transactions, you may find the surcharge is higher than if you insert your debit card and enter the PIN. This is because Visa and Mastercard process the contactless payments. Whereas the eftpos system processes payments where you swipe or insert your debit card and choose "cheque" or "savings".

In comparison to credit cards, you are much less likely to get reward points or other complimentary extras with a debit card. There are some exceptions – such as the Bankwest Qantas Transaction Account that earns Qantas Points. There'es also the Citibank Plus Everyday account, which gives you access to the Citibank Dining Program. In general, you'll be limited to whatever retail offers Visa or Mastercard have available for cardholders.

Unlike credit cards, your applications for debit cards and transactions aren't listed on your report and don't impact your credit score.

What about security?

Like credit cards, debit cards offer a zero liability policy, which means you will be refunded for fraudulent transactions. Some debit cards also offer fraud-monitoring services. If you're subject to fraud, you will be left without that money until the bank has fully investigated the claim. This could take a few weeks or months.

Which is better?

With a credit card, you get the flexibility of paying off the balance over time, as well as more options when it comes to rewards and other perks. But a debit card often means you will pay fewer fees and have more control over your spending because the money is coming straight from your bank account.

So even though most of us now make payments with plastic, the type of card we use is ultimately a personal choice.

Image: Getty

Back to top

Related Posts

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

Credit Cards Comparison

Data indicated here is updated regularly
Name Product Purchase rate Balance transfer rate Annual fee
Skye Mastercard - Exclusive Offer
23.99% p.a.
0% p.a. for 25 months
Finder Exclusive
Save with 0% p.a. on balance transfers for 25 months, up to 110 days interest-free on purchases and flexible instalment plan options.
ANZ Low Rate - Exclusive Offer
12.49% p.a.
0% p.a. for 25 months with 1.5% balance transfer fee
$0 annual fee for the first year ($58 p.a. thereafter)
Finder Exclusive
Save with 0% p.a. on balance transfers for 25 months (with a one-time 1.5% BT fee) and $0 first year annual fee. Ends 30 Sept 2020.
NAB Qantas Rewards Signature Card
19.99% p.a.
0% p.a. for 6 months with 2% balance transfer fee
$295 annual fee for the first year ($395 p.a. thereafter)
Collect up to 130,000 bonus Qantas Points. Get 100k when you spend $3,000 on eligible purchases in the first 60 days and 30k after 12 months.
ANZ Platinum Credit Card
0% for 17 months, reverts to 20.24% p.a.
20.24% p.a.
$0 annual fee for the first year ($87 p.a. thereafter)
Receive a 0% purchase rate offer for 17 months and a $0 first-year annual fee. Plus, complimentary overseas travel and medical insurance.

Compare up to 4 providers

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

Go to site