Both have advantages in different circumstances
Debit cards are an easy and convenient way to make purchases without overspending and avoid interest and possible late payments/fees.
Credit cards are preferred for large ticket items due to the flexibility and possible points/bonuses but it is crucial to make on-time payments to avoid interest and late fees.
Both cards offer fraud prevention and have similar dispute protocols for unauthorized purchases. The key is reporting fraud or theft as soon as you realize it has occurred. The best practice is to set up alerts each time the card is used to help stop fraud as soon as possible.
Debit Cards
Debit cards are the most popular payment method due to the convenience. Most people have automatic access to a debit card upon account opening and do not have to undergo a credit history or pay annual fees. Using your debit card is directly pulling the funds from your checking account which makes it easier to budget and reconcile your account. They also provide a way to get direct access to your funds at ATM’s or by getting cash back when doing point of sale (POS) transactions.
Debit cards can also be processed as credit at POS terminals. This does not mean that you are going to have to pay interest or that you are borrowing funds, this just changes how the payment is completed on the backend and will bypass entering a PIN. Most gas pumps will hold funds if you use your debit card as debit when paying at the pump. If you instead choose to bypass the PIN and use your card as a credit, it will skip the holding of funds.
Credit Cards
Credit cards give you access to a line of credit that is determined at the time you apply. Credit cards companies utilize your credit score to determine the issuer’s risk in extending a credit limit and may choose to decline if they feel the risk is too high. Along the same lines, when using your credit card, it will directly affect your credit score. If you pay down your card regularly and make on time payments it will improve your credit score and will minimize the interest you have to repay. If you continuously have a large percentage of your credit limit used or make late payments, this will negatively affect your credit score making it harder to apply for loans in the future and you will incur late fees and interest.
Some credit cards may offer cash back bonuses or points when using your card. These points and bonuses give credit cards an advantage for large purchases.
Credit cards are also a preferred method when paying for items that require a deposit such as hotels or car rentals. By using your credit card, you are not having to have funds in your checking account held.