Credit vs. Debit Card When Shopping Online

When shopping online many people are unsure whether or not they should use a traditional credit card or their debit/bank card. Although debit cards can be easily used to make online purchases, there are some things customers should know about the way they work. Here are a few advantages, disadvantages, and differences between using a debit and credit card when shopping online.

What are the differences between credit and debit cards?

A credit card is an independent credit line that is not associated with your banking account and is subject to interest charges. Even though your debit card has a Visa or Mastercard logo, it does not function like a traditional credit card. Debit cards never accrue interest because the funds are taken directly out of the available balance in your banking account.


Credit card advantages:

Safer for online shopping – Credit cards often offer more protection from fraudulent charges or provide more recourse if fraudulent charges are made. If you see an authorized transaction, a seller doesn’t ship your product, etc., you can dispute the credit card transaction. If someone obtains your debit card, you will often get the funds restored to your account, but you will most likely have to wait a much longer time.

Extended warranty programs – Many credit card companies offer extended warranties on products you purchase using their credit cards.

Rewards cards – Most major credit card companies offer several types of rewards cards. This means when you use your credit card you gain points you can use toward flights, free gifts and more. These types of programs are not available on most debit cards.

Credit card disadvantages:

Interest charges – Every purchase you make using a traditional credit card is subject to interest charges. This can make you end up paying much more for a product than if you were to have just paid for it outright.

Fees – If you fail to pay your traditional credit card bill on time you will be subject to a late fee. Many cards also have annual fees.

Debit card advantages:

No interest – Since funds come directly out of your banking account you are never charged interest on a debit card transaction. Interest charges associated with traditional credit cards can often mean you end up paying way more for a product if you do not pay off the balance right away.

Can’t spend money you don’t have – Many customers like to use debit cards so they avoid future debt. If you do not have money available in your bank account, a debit card transaction will be declined, where as a credit card will allow you to spend above your current means.

Debit card disadvantages:

Holds – Every time you attempt a transaction with a debit card there is a hold for that amount placed on your bank account. That means, even if the transaction is declined due to an address mismatch, numbers entered incorrectly, etc., the amount you were attempting to purchase will not be available to you until several days later. This can cause a big headache if you keep attempting the transaction with a debit card. For instance, if you are attempting to pay for a $50 item with a debit card and it’s declined, each decline will take away another $50 from your available balance. That means 3 declined transactions at $50 each will make $150 not available to you for several business days. These holds can also result in overdraft fees.

Less online shopping protections – If you use your debit card for an online transaction with a dishonest person or company there is much less recourse you can take to get your money back. Traditional credit cards offer many more protections against fraudulent transactions.

Hopefully we’ve been able to clear up some common questions regarding credit and debit cards. If you have specific questions about a past, potential, or an attempted purchase with TSS-Radio, please contact us at or call 773.772.4340.

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