Is it better to have a debit card or credit card? – Both types of cards offer different advantages and disadvantages that need to be understood to make the best choice for your needs.
The short answer:
Debit cards are usually free and offer no debt risk as they are linked directly to your bank account. Credit cards come in paid and free variants and have different benefit programs such as discounts, cashback, or points.
In the following article, we will take a closer look at the advantages and disadvantages of the two types of cards.
Difference between debit- and credit cards 💳
A debit card is linked directly to your bank account. When you pay with a debit card, the amount is debited directly from the account. Debit cards are handy for keeping track of your spending, as you can only access the money you already have.
In contrast, a credit card allows you to borrow money up to a certain credit limit, which depends on your credit score. When using a credit card, you pay back the borrowed money at a later date, often with interest, if the full amount is not paid within the billing period.
While debit cards are valued for their direct debit and lower risk of debt, credit cards offer more flexibility and often additional benefits such as bonus programs or insurance coverage.
Debit Card vs. Credit Card nationally 🇨🇭
As far as fees are concerned, they are highly dependent on the offer. There are hundreds of different debit and credit card offers in Switzerland (we have compiled the best credit cards for each user category for you here).
Debit cards are usually included free of charge when you open an account with a Swiss bank.
With credit cards, you have to choose between paid and free offers, with the paid ones offering more additional benefits (e.g., things like purchasing insurance or airport lounge access).
Using a debit card domestically is particularly beneficial for people who want to maintain strict control over their finances. As the money is taken directly from your account, there is no risk of accumulating debt. However, debit cards often offer fewer additional services, and spending is limited to the available balance in your account.
Credit cards, on the other hand, are popular in Switzerland because of their flexibility and, above all, their reward programs. They allow you to buy now and pay later, which can be particularly useful when unforeseen expenses arise. Many credit cards (including those offered free of charge) offer bonus programs, cashback, insurance coverage, and other benefits. The downside, however, is the risk of getting into debt, especially if you tend to spend more than you can afford. The interest and fees for late repayment can also be very high.
In both cases, it is, of course, important to use the cards responsibly and to fully understand the bank’s terms and conditions and fees.
Which is better abroad, debit- or credit card? 🌎
The choice between debit and credit cards becomes particularly interesting when using them abroad. Factors such as acceptance, fees, and security play an important role here.
Credit cards are often more widely accepted abroad than debit cards. Especially for hotel bookings, car rental reservations, and larger purchases, a credit card is often preferred or even required. This is primarily due to the security services offered by credit cards.
Regarding fees, debit cards can be cheaper abroad, as they often have lower fees for foreign currencies. On the other hand, credit cards can have higher fees for foreign transactions, especially cash withdrawals, and offer less favorable exchange rates.
If you are abroad and have the choice between a debit card and a credit card, you should take a quick look at the terms and conditions of both cards. There you will find the respective costs under “Foreign currency fees”, “Fees for use abroad”, or something similar. Often, “exchange rate fees” are also listed separately, which you must also take into account.
When it comes to security, credit cards offer advantages, but basically, both are very secure. Credit cards often offer a bit more comprehensive fraud protection and liability limits. In the event of theft or loss, they can also be blocked and replaced more quickly.
Practical tips for use abroad ☝
Regardless of whether you opt for a debit or credit card, there are a few tips you should follow to manage your finances safely abroad:
- Find out about fees before you travel: Check your bank or card provider’s fee structure for foreign use, including transaction and exchange rate fees. As mentioned above, you can find these online in your card’s terms and conditions.
- Save emergency contacts: Make a note of your bank’s international blocking hotline numbers so you can quickly block your card if it is lost or stolen.
- Take several means of payment with you: It is advisable not to rely on just one type of card. A combination of debit and credit cards plus some cash offers the most flexibility and security.
- ATMs are expensive: It is best to avoid withdrawing money from ATMs abroad. This is usually associated with high fees, unless otherwise stated in your card’s fee overview.
- Monitor your account statements regularly: Keep an eye on your transactions to quickly spot any unusual activity. Especially if you pay your credit card bill by direct debit, it is worth taking a regular look at your statement. Otherwise, fraud could quickly go unnoticed.
💳 Debit cards are ideal for people who want direct control over their spending and don’t want to run the risk of getting into debt. They are easy to use and often more fee-friendly.
💳 Credit cards, on the other hand, offer more flexibility and additional benefits such as bonus programs and insurance coverage but come with the risk of debt and higher fees.
Credit cards offer greater convenience and acceptance when traveling abroad, especially for bookings and larger purchases. However, it is essential to always monitor the fees and use the card responsibly.
A combination of both types of cards, supplemented by some cash, is the best solution for secure and flexible financial management abroad.