Credit Card vs. Debit Card

Credit cards and debit cards are essential payment cards in the modern economy. They offer convenience and flexibility when it comes to making purchases, but they differ in many ways. Before you decide which card to use, it is important to understand the differences between them, as well as their benefits and drawbacks.

Credit Card vs. Debit Card

What are Credit Cards?

Credit cards allow you to borrow money from a bank or financial institution to make purchases. The credit card issuer sets a credit limit, which is the maximum amount you can borrow. You can use your credit card to pay for goods and services, and you will be required to pay back the amount you borrowed, within the period of a month. If you do not pay the full balance, you will be charged interest on the outstanding balance.

What are Debit Cards?

Debit cards, on the other hand, allow you to spend money you already have in your bank account. You can use your debit card to make purchases, withdraw cash from ATMs, and transfer money between accounts. Debit cards work by deducting the amount of your purchase directly from your bank account. You can only spend the money that’s already available, so you do not have to worry about overspending, interest charges, or debt.

Credit Card vs. Debit Card

Differences Between Credit Cards and Debit Cards

The key differences between credit cards and debit cards are:

  1. Credit limit
    Credit cards have a credit limit, which is the maximum amount of money the cardholder can borrow. It is determined by your credit score, income, and credit history. Debit cards are linked to your current or savings account, and you can only spend the money available there.

  2. Fees
    Credit cards often come with annual fees, late payment fees, and other charges. Annual fees are charged for the privilege of having the card, while late payment fees are charged when you fail to pay the minimum payment or full balance on time. Credit card balance transfer fees are charged when you transfer the balance of one credit card to another. A cash advance for credit cards allows you to withdraw cash from the ATM, with a fee. Foreign transaction fees are charged when you make purchases in a foreign country. Debit cards usually do not have fees, although some banks may charge ATM fees or annual fees.

  3. Interest rates
    Credit cards charge interest on the outstanding balance if you do not pay the full balance each month. Debit cards do not charge interest because you are spending your own money.

  4. Rewards
    Credit cards often offer rewards such as cashback, airline miles, or points for purchases. The rewards programme varies from one credit card to another, hence, you can choose one that suits your lifestyle and spending habits. Debit cards usually do not offer rewards, although some banks may have reward programmes for their users in the form of cashback, interest on savings, and other benefits.

  5. Security
    Credit cards offer more security against fraud because you are not liable for unauthorised purchases. If you notice any fraudulent activity on your account, you can report it and the bank will investigate the matter before refunding the unauthorised charges. Debit cards offer less protection because you may be liable for unauthorised purchases if you do not report them promptly.
Credit Card vs. Debit Card


How Credit Cards and Debit Cards Impact Your Credit Score

Credit cards can help you build a good credit score if you use them responsibly and make timely payments. Debit cards do not have any impact on your credit score because you are not borrowing money.


Choosing the Right Card for You

When choosing between a credit card and a debit card, consider your financial goals and your spending habits. If you want to build your credit score, a credit card may be a good choice. If you prefer to spend only what you have, a debit card may be a better option.

If you decide to apply for a credit card, choose one that fits your lifestyle and spending habits. Many credit cards offer rewards for specific categories such as travel, dining, or groceries. You can use the Credit Card Recommender tool provided by Hong Leong Bank to help you find the right card for you.


Here’s How You Can Apply Online:

Debit Card

Step 1: Open a bank account online with Hong Leong Bank.

Step 2: Log in to HLB Connect Online and activate your Debit Card.

Step 3: You will receive your debit card via post based on the address you have specified in your online application. Your debit card will be delivered to you within fourteen (14) days after you have successfully made the first deposit into your newly opened bank account via an online transfer.


Credit Card

Step 1: Browse through our list of credit cards and click on Apply Now (online application is applicable for selected cards only).

Step 2: Provide the necessary information such as your Personal Details, Employment Details, and Supporting Documents.

Step 3: Once you have submitted your details, Hong Leong Bank will process your application for approval. Once approved, we will deliver your card to the address provided.