Debit vs. Credit for Purchases

Debit vs. Credit for Purchases

Debit vs. Credit for Purchases


Looking to better understand credit vs. debit purchases?

Want to buy something online or offline? Do you have enough money for the purchase? Possibly you’ve heard of debit and the credit purchase options, but you’re at crossroads when trying to figure out which of the two alternatives suits you best.

Well, you are in the right place. In the next couple of minutes here, you will understand what each of the options entails, with the pros and cons of both debit and credit purchases.

What Is a Debit Purchase?

A debit purchase is a transaction whereby a buyer buys a product or service using money from their bank account/chequing account.

This is where a debit card comes in handy. After the buyer authorizes the payment by keying in the right personal identification number, the merchant communicates with the relevant financial institution instantly. Then the required funds are transferred to the merchant’s account in real-time.

Debit purchases are the most popular modes of payment. In the U.S, debit card purchase volume was projected to hit $3,321 billion in 2018.

What is a debit card?


A debit card is a card issued by a bank and is used for debit purchases and ATM cash withdrawals. When making a debit purchase, payment is drawn from the card holder’s bank account that has been linked to the card.

According to, debt cards are the most popular method of payment. Unlike credit cards, the biggest pro of debit cards is that they don’t make their users go into debt because the cards only draw out the money in the holders’ accounts. The money in the account is placed in the bank by the user. So only the amount put in banks by the user can be spent.

What Is a Credit Purchase?

A credit purchase is a payment option whereby an entity (an individual or a company) buys goods or services but pays at a later date.

In other words, it is to purchase an item on account.

You can use a bank account number or credit card to make a credit purchase.

What are credit cards?


Just like debit cards, credit cards are thin, rectangular cards. However, these allow an entity to buy goods or services on account with a certain limit and settle the payment at a specified future date.

These 16-digit plastic or metallic cards are issued by financial service institutions such as commercial banks. The card issuer lends money to the cardholder through the card.

Besides making purchases, the credit can also be withdrawn as cash for other uses. According to, credit cards come second in the list of the most popular payment methods.

Credit Card Companies Make Money On Interest On Outstanding Balances From Card Holders

The other thing to consider with credit cards is that they charge interest for late fees. In fact, some credit cards go up to 24% per year on outstanding balances after 21 days typically. Besides annual fees charged to card holders, this is the number one way credit card companies generate revenue from providing advances on purchases from their customers.

Pros & Cons of. Credit Purchases

Credit purchases have both advantages and disadvantages.

Pros to Credit Purchasing

The benefits of using a credit card for purchases include:

Building Credit History

Credit cards for purchases can build the credit history of a buyer since all the credit card transactions feature in the credit report of the cardholder. Positive credit history such as timely payments and credit limit adherence can improve the card holder’s credit score. An improved credit score can help you qualify for lower loan interest rates for new loans. 

Warranty & Extra Protection

Some credit cards offer extra warranty or insurance cover for selected items bought through credit purchase. The extras come at no additional cost and go beyond the warranties or insurance covers offered by the sellers of the products.

Cons to Credit purchasing

Credit Cards Can Lead to Large Debt

When you make credit purchases, you use the money of the card issuer, not yours. When you spend too much credit than you can repay on time, you might end up accumulating huge debts that you’ll struggle a lot to repay.

Advantages of debit cards

No annual fees on debit cards

A credit cardholder is obligated to pay a given annual fee to continue using the card. On the other hand, debit cards don’t charge annual fees. As a result, debit purchasers can save more through their debit cards as compared to credit card users. However, it is worth noting that a debit card can attract other fees for checking account maintenance.

Learn the concepts of credit scenarios

At WazzCards, we provide an app that gives students, parents and teachers the opportunity to apply the concepts of debit and credit purchases in questions that are based on real life scenarios.

Here is an example of a credit purchase:

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Again, this sample question is from the Grade 7 Math – Financial Literacy deck that parents can use to help explain the impact of interest that is payable from credit cards. Reinforce the concepts of credit and debit on our online WazzCards App here.


Credit cards and debit cards are convenient options for product and service acquisition. However, credit card users ought to be extra-careful to avoid accumulating debts that could adversely affect their budgets and credit scores. Nonetheless, with prudent use, credit purchases can translate to access to better loan interest rates. On the other hand, a debit card can help one save more, as it doesn’t have annual fees and limits harmful debt accumulation.

Keep the learning going with our regular blog updates and our WazzCards app.

Questions or thoughts? Reach out to us at [email protected] or comment below!