The difference between debit and credit cards

The way you use them might be similar, but credit and debit cards have key differences.

Choosing which card to use

A few factors might influence whether you choose to use a credit or debit card:

  • Card features and benefits.
  • The costs of using your card, either at home or abroad.
  • The extra responsibility of using and managing credit.

About debit cards

Debit cards are linked to bank accounts. When you use them, money is taken from your account.

Using a debit card

The money you’re spending is your own, unless there’s an overdraft linked to your account – that’s a type of credit, so interest and charges could apply when you use it.

You can withdraw cash from an ATM, or pay for goods and services with a debit card.

Debit card features

  • Withdraw cash at an ATM. With a Halifax debit card you can withdraw up to £500 a day at an ATM, or more in-branch.
  • Get cashback at most UK supermarket check-outs – up to £50 with a Halifax debit card.
  • Easy payments. Set up one-off and regular payments from your Halifax bank account.
  • Contactless. Debit cards are usually contactless, so you can make transactions without entering your PIN.

More on debit cards

About credit cards

Credit cards are separate accounts, giving you the flexibility to borrow money and repay it later.

Using a credit card

You’re not spending your own money. Instead you’re using a pre-agreed credit limit, which could help you to manage everyday expenses, or spread repayments for large purchases or transfers.

You can withdraw cash from an ATM, or pay for goods and services with a credit card. It’s just important to know that interest and charges might apply.

Credit card features

  • Make balance transfers from most other credit card providers, and selected store cards. Fees might apply. Transfer as part of a Halifax credit card application, or once you’ve got your card.
  • Make money transfers on selected cards, moving funds from your credit card to your UK current account. Fees might apply. At Halifax, you can only transfer once you’ve got your card.
  • Regular payments can be set up on your credit card account.
  • Protection. Most credit card purchases of over £100 and up to £30,000 are covered by Section 75 of the Consumer Credit Act.
  • Contactless. Credit cards are usually contactless, so you can make transactions without entering your PIN.

More on credit cards

It could be handy to have both

Some retailers and service providers don’t accept credit cards, or only accept certain types. Carrying a debit card could be useful for these situations, as a more secure alternative to cash.

If you have the choice of using either a credit or a debit card, it’s important to understand the costs before deciding which to pull out of your wallet.

Understanding the costs
 

  • The costs for using a credit or debit card might vary between lenders, but here’s some information you might find useful about Halifax cards:

    Transaction type

    Debit card costs

    Credit card costs

    Transaction type

    Cash withdrawals at a Halifax ATM.

    Debit card costs

    Free.

    Credit card costs

    A cash advance fee might apply.

    Transaction type

    Cash withdrawals over the counter at a Halifax branch.

    Debit card costs

    Free.

    Credit card costs

    This service is no longer available at Halifax branches.

    Transaction type

    Cash withdrawals at another ATM or branch in the UK.

    Debit card costs

    Halifax won’t charge you, but the cash machine owner might. Check for charges first.

    Credit card costs

    In addition to any cash machine charges, a cash advance fee might apply.

    Transaction type

    Cash withdrawals at an ATM or branch outside the UK.

    Debit card costs

    In addition to any service provider charges, a foreign currency transaction and purchase fee might apply.

    Credit card costs

    In addition to any service provider charges, a foreign currency transaction and purchase fee might apply.

    Transaction type

    Sterling card purchases.

    Debit card costs

    Free.

    Credit card costs

    Free.

    Transaction type

    Non-Sterling card purchase.

    Debit card costs

    A foreign currency transaction fee might apply.

    Credit card costs

    A foreign currency transaction fee might apply.

    Transaction type

    Buying foreign currency or travellers cheques from Halifax.

    Debit card costs

    Free.

    Credit card costs

    A cash advance fee might apply.

    Transaction type

    Buying foreign currency or travellers cheques from another branch, agent, or bureaux de change.

    Debit card costs

    Halifax won’t charge, but other providers might. Check for charges before you go ahead.

    Credit card costs

    In addition to other provider charges, a cash advance and foreign currency transaction fee might apply.

    More on credit card cash advances

    It’s useful to remember that interest might also apply when you use a credit card, so make sure you understand the costs in advance.

    More on credit card interest 

    To check the fees and charges which apply to your credit card, refer to the terms and conditions of your account, or your latest statement.

  • It depends on your account terms and conditions, but additional charges might apply when using a credit or debit card abroad.

Extra protection on credit cards

Most credit card purchases of over £100 and up to £30,000 are covered by Section 75 of the Consumer Credit Act 1974, which means you could claim a refund if something you’ve paid for is faulty, doesn’t arrive or isn’t as described.

This doesn’t apply to debit card purchases.

More on Section 75

Other things to think about

Convenience could cost you

Credit cards give you the flexibility to buy now and pay later, which could be really helpful if you need to cover costs you’ve not budgeted for.

Interest

It’s important to know that interest usually applies to credit. The cost of borrowing depends on the terms and conditions of your credit card, or any arranged overdrafts on your current accounts, so make sure you check and understand those before you spend anything.

Offers

If your card offers an introductory or promotional interest rate, you could take advantage of that and spread your repayments, but keep an eye on the offer expiry date. If you haven’t repaid your balance by then, your standard interest rate will apply to any remaining balance.

If you can afford to pay without borrowing, for example, using your current account balance or savings, that’s usually the cheapest option.

Manage credit carefully

If you use a credit card, there are some important things to think about:

  • Will you be able to repay what you’ve borrowed, even if your circumstances change?
  • You’ll pay interest on card purchases unless a 0% p.a. promotional rate for purchases applies, or you pay off your full statement balance every month.
  • In addition to fees and charges, your credit score could be affected if you miss a payment or go over your credit limit.
  • You must make at least the minimum payment on time each month, but we recommend paying as much as possible to reduce your balance and any interest you pay. This could also help you to avoid falling into persistent debt.

 

Tips for managing your credit card

A summary on credit and debit cards

Debit cards are linked to bank accounts, while credit cards are separate.

 

  • When you withdraw cash or spend with a debit card, it’s usually your own money, unless you have an overdraft, which is a type of credit linked to your account.
  • Credit cards give you access to a pre-agreed credit limit. When you spend or withdraw cash, you’re borrowing money you’ll need to repay.
  • Interest might be charged on anything you borrow using credit. Fees and charges might also apply, both at home and abroad.
  • If you use credit, it’s important to manage your account and payments well to avoid additional fees, charges and any negative impact on your credit score.

Want to read more?
 

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.