How Credit Cards enhance your shopping experience?

Credit cards are better than debit cards when it comes to ensuring safety, convenient repayment, and building credit scores during online shopping 

Both are cards, both are money, yet both are quite different. The debit card and credit card comparison can polarise people, with a clear fan following for both camps. But is there a clear winner? Let’s see why a credit card is a better option for you compared to debit cards. From safety to repayment, from benefits to dispute protection, credit cards have a few clear advantages when it comes to online shopping.

1. Better fraud prevention 

Credit cards are separate from your bank account, which automatically improves your financial safety. If you maintain a decent balance in your bank account and use its debit card for transactions, the bank balance gets exposed to a higher level of fraud risk. Credit cards help you keep your primary account safe from any cyber exposure. This is because debit cards are directly linked to your account and are more like electronic cheques.

2. Convenient payback options

With credit cards, you don’t need a fund to spend from. You can use any amount up to your credit limit and repay it on or before the due date. You get a convenient gap between transaction and payment and further flexibility while doing so. You can spread it over a few months and repay the amount in the form of easy EMIs. To use a debit card, you must have funds in your bank account. If you are short of cash, a debit card is of no use, but a credit card can come in handy in such situations.

3. Better rewards and offers

Credit cards have better reward schemes and offers, something that is comparatively non-existent in debit cards. You can earn reward points as you use your credit cards. Tie-ups with merchants mean that you can enjoy other benefits as well. For instance, some credit cards have attractive cashback and rewards on fuel payments, and many offer you frequent flier miles based on your air ticket expenses. You even get access to premium lounges and golf courses! Debit cards also have some benefits, but these pale in comparison to what credit cards offer.

4. Building a credit history 

Judicious use of credit cards is a smart way to build your credit history. Credit reporting agencies duly note your transactions, timely payments, and delays against your credit card. Therefore, if you maintain a healthy and active use of credit cards, your credit score will automatically increase. This includes timely payment of credit card dues, usage within credit limits, active usage record etc. The use of debit cards, on the other hand, is simply a payment made from your bank account. Debit card transactions don’t add to your credit profile.

5. Faster dispute resolution

Credit cards offer you dispute protection through an arrangement known as a chargeback. If you paid a merchant through your credit card and the merchant vanished without providing you with the services or product, you can dispute the transaction and take it up with the credit card company. The money is returned to you while the credit card company investigates the issue. This is a major consumer protection incentive that credit cards offer and is another area where it outscores a debit card. Debit card users would find it difficult to recover their money in similar situations.

Why is a credit card a better option for online shopping?

Debit cards stop you from spending heavily on online shopping and ensure that you live within your means. Reckless spending of credit cards can put you in a credit trap, and escalated interest rates can also increase your financial outgo. But judicious use of credit cards can help you enjoy the benefits of a credit card without much concern. Compared to debit cards, credit cards are dynamic both in usage, repayment terms, and benefits. This makes them a popular form of money in online shopping.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.