Credit Card vs Debit Card payment: Festival sales are here again with companies, online and offline stores offering big discounts on products across all categories.
Credit Card vs Debit Card payment: Festival sales are here again with companies, online and offline stores offering big discounts on products across all categories. Some of the offers might be too tempting to ignore. But what should you use for payment? Cash, Debit Card or Credit Card? Cash is no longer the best option for shopping for several reasons you are already aware of. The choice between Debit and Credit Card should also be made consciously. There are differing opinions on which of the two is the best option for making payments – online or offline.
Ex-con artist and cyber fraud expert Frank Abagnale warns that debit card should never be used. In an article for CNBC, Abagnale reasons that a debit card is the “worst financial tool”. Your money and bank account is at risk every time you use a Debit card.
If your Debit Card details land in hands of a fraudster, he can steal all money from your account within minutes.
Popular Hollywood movie ‘Catch Me If You Can’ is based on Abagnale’s memoir of the same name.
Instead of Debit Card, Abagnale suggests Credit Card should be used as there are multiple benefits. First, with credit card, you spend the credit card company’s money and pay at the end of the month while your own money in account earns interest for that time. Secondly, there is a credit limit on cards. So, no one can spend on your card over the limit. Thirdly, even when there is a large data breach and your card details fall in the hands of fraudsters, the company will cancel the card and send you a new one.
Credit Card payment vs Debit card: Both are okay?
However, there is another view that says there is no risk in using either Debit Card or Credit Card if transactions are done while following the best safety practices.
“Customers can use both credit and debit cards to make payments for online and offline purchases. In case of debit cards, customers spend money by drawing on funds that they already have in their bank account while on the other hand credit card consumers borrow money from the card issuer for purchasing items. Debit is paying now while credit is pay later. While both debit and credit cards have their benefits, it completely depends on the customers’ requirements on which one to use,” Navtej Singh, CEO of Digital Business, Hitachi Payment Services, told FE Online.
Singh further said these days it is safer to transact using any card but consumer awareness about frauds are important. “Presently digital transactions are considerably safer with the introduction of stricter compliances and regulatory norms such as EMV chip, tokenization and two-factor authentication. At the same time to avoid frauds, consumer awareness is equally imperative. It is important that consumers religiously follow user safety guidelines while performing any digital transaction. This combination of secure technology and payment systems coupled with complete customer awareness is the only route towards safer digital transactions,” he said.
Rajesh Desai, CEO & Director Lyra Network (India), stressed on the need to follow certain security measures to avoid frauds. “With the technology becoming more and more sophisticated with each passing day, digital transactions are hardly vulnerable to breaches anymore. Today, the payment gateways offer highly effective security and anti-fraud tools to make transactions safe and secure. Transactions are done after double (or even triple) authentication. So, we can say that following certain security measures can help one avoid any cyber fraud,” Desai told FE Online.
Mandar Agashe of Sarvatra Technologies said, “Both these payment channels are quite similar in terms of facilities and ease of use. Debit cards, allow customers to use funds only up to the balance amount in the bank account, while credit cards allow consumers to borrow money from the card issuer up to a certain approved limit. Credit card increases borrower’s purchasing power as the borrowed amount can be repaid over a period of time.”