Debit vs credit cards

Lesson 3 of 14 in our free Banking & Payments guide: a 5-minute money game with the key points below.

This lesson is in the full version.

Free with a code from your uni, college, council, landlord or employer (worth £600/year). Lesson 1 of Banking & Payments is free for everyone.

Questions you'll answer

Mo buys a £400 laptop with a credit card. The shop vanishes and it never arrives. What helps most?

Money leaves your current account straight away → Debit. Debit = your own money, right now.
You get a monthly statement and a minimum payment → Credit. That's a credit card. Paying only the minimum = interest.
Section 75 protection on purchases over £100, up to £30,000 → Credit. Credit cards get this extra legal protection if things go wrong.
Can push you into an overdraft if you spend more than you have → Debit. Debit spending can dip into an overdraft if you have one.
Missed payments can show on your credit file → Credit. Credit is borrowing, so how you repay is recorded.
Myth: “Debit card payments have no protection at all.” — There's 'chargeback' — a voluntary card scheme process. Weaker than Section 75, but worth asking your bank about.
Fact: “Paying a credit card in full each month usually avoids interest on purchases.” — That's how people use credit cards without paying interest. Minimum-only is the trap.
Fact: “Withdrawing cash on a credit card is usually expensive.” — Cash withdrawals often carry a fee and interest from day one.