The battle between debit cards and credit cards has reached an interesting point in the retail sector.
While debit cards tend to be used more frequently than credit cards, the latest research from NAB and Quantium shows that people favour credit for higher cost transactions.
Retail spending is at the top of the list, with the average Australian putting $5090 onto cards every year.
The next biggest spending category was retail, with a yearly cost of $3778, which is significantly less in comparison.
So what reasons could there be for favouring credit over debit in the retail sector?
While it comes down to personal preferences, one of the main advantages to credit cards is that you get access to extra funds so that you can buy what you want, when you want it and do not have to wait until payday.
There are also a number of common credit card features that could be an advantage for retail purchases, including:
- Complimentary purchase protection insurance,
- Complimentary extended warranties; and
- Best price guarantees.
These three features can save you a lot of money on purchases in different ways.
Purchase protection, for example, will help you get reimbursement if something you have bought is lost, stolen or accidentally damaged.
Best price guarantees, on the other hand, allow you to claim the difference in cost if you buy something then see it for cheaper somewhere else.
Advantages To Debit Cards
While the flexibility of credit cards and the features above definitely make them an appealing option for retail shopping, the downside is the cost of interest rates.
In contrast, paying with debit should cost you nothing in most cases (the exception being some fees for things like shopping overseas).
But with the right debit card, there could also be other benefits that are similar to the ones you get with a credit card.
If you are a big spender and want to save on credit costs, these two debit cards are convenient alternative.
Both credit cards and debit cards have their own pros and cons that need to be considered before making a choice between them, but looking at all your options is a good place to start.
That way you can get everything you need from a card without worrying about the cost now or in the future.