A debit card is like owning cash and only using a debit card is like paying for your expenses with the cash available in your pocket. Money is directly used up from your account in the case of debit cards and no credit handling is required in this case.

In the case of credit cards or any loan, the bureaus give a rating to an individual for the reason being that they want to observe and analyze how the individual has been handling credit and how the individual reacts to funds being given and the usage of the same.

The credit bureaus will evaluate the past records and also how many loans have been previously taken by the borrowers and if they are repaid back in time. In the case of debit cards, no such evaluation is required from any institution.

What is a Debit Card?

A debit card is a facility that is given to the account holder of a bank account to withdraw money from the account as and when required by the customer. Money can be transferred electronically using this card. But unlike credit cards, the purchases are made from the card directly from the account. For the purchase to be made by the customer, the card should have enough funds that are the account of the customer should have a sufficient balance so as to make the purchase the customer.

Debit cards are used in two ways 

  • The customers can use a debit card as an ATM card for withdrawing cash
  • The debit cards can be used as a cheque by the customer for buying items instead of cash.

How does a debit card work?



A debit card deducts money from the savings account and uses it for the current expenses 

The source of funds for a debit card is savings and current bank account.

In this transaction, the purchaser is the customer 

No payments are to be made in a the case of debit cards


In case of debit cards the funds are restricted to the amount that is present in the account

Debit cards do not provide any additional advantages to the customer



A credit card is used to borrow funds to pay for purchasing any goods and services

Source of funds for a Credit card is credit that is extended by the lender 

In this transaction, the purchase is done by the credit card company and the customer then pays the company

In this case, payments are to be made every month to the credit institutions for using the funds provided by them

In case of credit cards, the limit is fixed for borrowing of credit and can be extended for a certain fee

In case of credit cards, the customer has various advantages in regard to using the funds like dining, traveling etc.


When you use the debit card offline, the debit card is swiped using a card machine. This payment is very swift and convenient. The card after it gets inserted into the machine asks for the customer's PIN number and the unique four-digit number has to be entered by the customer. The customer's bank processes the payment request of the merchant and thus the fund gets debited from the customer's account to the merchant's account.


For using the debit card online the details of the card such as the card number, expiry date and the CVV of the card have to be entered by the customer. Once the details are entered by the customer a one-time password is sent by the merchant on the registered mobile number and has to be entered to successfully complete the transaction.

Benefits of using a debit card

  • Debit cards are easy to use and convenient for the customer. The card has to be swiped by the customer and the existing funds can be expended by the individual on the transaction.
  • The debit cards can act as cash for the individual and can be used instead of cash in transactions. The debit cards also can be used as ATM cards and thus the cash can be withdrawn using a debit card.
  • Debit cards are available to customers who have a bank account with a minimum balance. Thus anyone with a minimum balance in the account is eligible to get a debit card from the bank.

Debit Card v/s Credit Card

Which is better? Credit Card or Debit Card

The answer to this question actually depends upon the problems that the customer is facing or the requirements of the customer or individual.

  • In case of the risk of overspending, a debit card should be used as the likelihood of spending money more than the limit is less in this case.
  • For withdrawal of cash, a debit card can be used. Since own money is used therefore no charges are levied.
  • For online shopping transactions, a credit card can be used as it provides security against cyber crimes and can be easily detected for any fraud.
  • In case of making a big purchase a credit card is helpful as it provides the facility to break down the amount into smaller EMIs for the individual.


The debit card use does not directly affect the credit score as no borrowing is involved in the process. The debit card is directly linked to the account of the individual and hence no funds are to be borrowed by the individual. No credit history is created by using the debit card and hence it does not affect the score either positively or negatively for any individual.

FAQS of Does using a debit card increase your credit score?

1:Do debit card transactions have limits?

Yes, for offline as well as online transactions of debit cards there is a limit as to how much funds can be withdrawn or used on a particular day.

2:Is debit card use always better?

No, in the case of borrowing credit, the cash in hand is kept intact and thus the purchases can be made easily by using a credit card.

3:Do credit cards have charges associated with them?

Yes, since credit is borrowed and used by the individual, the charges associated with it are to be every month by the individual.