Credit Card vs Debit Card: Key Differences
How credit and debit cards differ on money source, cost, rewards, fraud protection, credit score and UPI — and when to use which.
Updated 30 September 2026 · 107 cards from 17 issuers trackedWhat you need to know
A debit card spends money already in your bank account; a credit card spends the bank’s money, which you repay later — free if you pay the full bill by the due date. That one difference drives everything else: credit cards build a credit history and keep your savings untouched during fraud disputes, but can become expensive debt; debit cards can’t push you into debt, but earn little and don’t help your credit score.
- Both are covered by RBI’s limited-liability rules for unauthorised electronic transactions.
- Since 2022, RuPay credit cards can also be used on UPI for merchant payments; debit cards link to UPI through the bank account itself.
- Cash withdrawal is normal and cheap on a debit card, and expensive on a credit card.
Side-by-side comparison
| Feature | Credit card | Debit card |
|---|---|---|
| Money used | Bank’s credit line, repaid later | Your own savings balance |
| Cost | Free if paid in full; 3.5%–3.75% a month + GST if not | No interest; usually an annual card fee |
| Credit score | Builds your credit history | No effect |
| Rewards | Typically 0.5%–5% as cashback or points | Rare and small |
| Fraud impact | Disputed amount is the bank’s money until resolved | Money leaves your account until refunded |
| Cash withdrawal | Fee about 2.5% (min ₹500) + interest from day one | Free within the ATM free-transaction limits |
| Spending limit | Credit limit set by the issuer | Account balance and daily limits |
| Extras | EMI conversion, lounge access, low-forex options, insurance on some cards | Basic insurance on some cards |
| UPI | RuPay credit cards: merchant payments only | Via linked bank account: payments and transfers |
Which to use when
Credit card, paid in full — you earn rewards and keep fraud away from your savings.
Debit card at an ATM. Avoid credit card cash advances.
A low-forex credit card for purchases; carry a debit card for local cash as backup.
Debit card if you tend to overspend or carry balances on credit.
Fraud protection on both
- RBI circular ’Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, RBI/2017-18/15, DBR.No.Leg.BC.78/09.07.005/2017-18, dated 6 Jul 2017.
- Zero liability: (a) bank’s contributory fraud/negligence/deficiency, regardless of reporting; (b) third-party breach where customer notifies within 3 working days.
- Limited liability (third-party breach reported in 4–7 working days): lower of transaction value or cap — BSBD ₹5,000; savings/PPI/gift cards/small MSME ₹10,000; credit cards with limit up to ₹5 lakh and large business accounts ₹25,000.
- Reported beyond 7 working days: liability per bank’s board-approved policy.
- Shadow credit of disputed amount within 10 working days of notification; complaint resolved within 90 days; burden of proving customer liability lies on the bank.
Frequently asked questions
Which is better, a credit card or a debit card?
For purchases, a credit card paid in full each month is usually better: rewards, fraud protection and credit history. For cash and for people who struggle with repayment, a debit card is safer.
Does using a debit card improve my credit score?
No. Debit card use is not reported to credit bureaus because no credit is involved.
Can I use a credit card like a debit card for UPI?
Only RuPay credit cards can be linked to UPI, and only for paying merchants — not for sending money to people or withdrawing cash.
Is a debit card safer than a credit card?
A debit card can’t put you into debt, but fraud on it takes money straight from your account. Credit cards generally give a better position during disputes.
Card features, fees and reward rates are compiled from issuers’ published terms and reputable card-review sites (source and date on each card page). Issuers change benefits often — confirm the latest MITC before applying.