HOME > BLOG > Budgeting and Saving > Credit vs. Debit: Which card should you use?

When shopping, which card gets more of a work out, credit or debit? Paying by card is convenient, but is one better than the other?

According to recent research from creditcardfinder.com.au, debit card use has hit a record high. Australians are now making 384,600 debit card purchases a month, compared to 200,700 on credit cards.

Did You Know?

The numbers also reveal that the total value of credit card purchases is a lot more than those on debit. Research shows that in November 2015 the value of debit purchases totalled $19.7 billion, compared to over $25.6 billion spent on credit cards. .

With access to tap-and-go technology, Australia is starting to move closer to a cashless society. But there are a number of factors to consider when deciding on whether to choose a credit or debit card.

According to Bessie Hassan, Consumer Advocate at creditcardfinder.com.au, “Borrowers should consider fees and charges, ability to service credit card debt and rewards on offer when choosing between credit and debit cards

“Credit cards might be the better option for more expensive purchases as you defer payment for your purchase until later in the month; if you make payments by the due date, you’re effectively getting free use of credit.”

If you have an offset account linked to your home loan, putting all your purchases on credit and paying at the end of the month keeps your cash working for you until the payment is due. Any cash in your offset account reduces the interest you are paying on your home loan so the longer you keep it there the more you will save.

Borrowers should consider fees and charges, ability to service credit card debt and rewards on offer when choosing between credit and debit cards.

Bessie Hassan, Consumer Advocate at creditcardfinder.com.au

To do this you need to be organised and ensure you pay your credit card debt in full by the due date.

“If you are the type of person who struggles to meet repayments, a debit card where the money is taken directly from your own funds with no bills to worry about at the end of the month is the better option,” she says.

Listed below are just some of the pros and cons of both credit and debit cards.

Credit card pros and cons


  • Reserve your own cash by paying for all your purchases on credit and repay when the card payment is due

  • Handy in the event of an emergency such as an unexpected fine or bill

  • A credit card may help to build a credit history when applying for larger loans

  • Some credit cards have reward programs and incentives such as free travel insurance and flight points


  • Interest will cost you a lot if you do not repay the full amount owing each month.

  • May increase chance of impulse buying and overspending. If you have the ‘buy now, worry later’ mentality, it could hurt you down the track when you have more debt than you can handle.

  • Could hurt your credit rating. If you have late or missed repayments, these may appear on your credit report and affect your chances of being approved for credit down the track. When you apply for a credit card the provider will check your credit report resulting in an enquiry. Too many enquiries can impact your credit rating.

Read more

Find out more about how credit cards and other factors can affect your credit rating in our blog: Credit reports and your credit score.

Debit card pros and cons


  • Easier to apply for than a credit card and can come automatically with a savings or transaction account. It doesn’t involve a credit enquiry, so won’t impact your credit report

  • You are able to withdraw cash with it

  • Helps keep your spending in check. When you use your debit card, you are limited to the amount you have in your account and you may be more cautious about making impulse purchases


  • Your card history cannot be used to improve your credit score

  • Some banks may have a limit on transactions or charge for transactions

We can help!

At State Custodians, our most popular loans come with an offset account enabling your savings to work for you by reducing interest payable on your loan. We provide easy access to your cash with a Debit Mastercard. So whether you pay for all your purchases on credit or debit your funds can be working for you until you need them.

To find out more about home loans from State Custodians and the features they offer, give our Lending Specialists a call on 13 72 62 or leave your details here and they can contact you.