Trying to settle on which is best - debit card vs credit card - for Malaysia and beyond? What is the difference between debit and credit cards, anyway?
This guide covers all you need to know including the debit card and credit card meanings, pros and cons and which card type might be the best to pick.
Before we get into definitions and a debit card vs credit card head to head, let’s look at an overview on a few key features:
| Feature | Debit cards | Credit cards |
|---|---|---|
| Cost to order and maintain | Free or low fee to order Often no annual or maintenance fee to pay | Often no fee to order Annual fees are common and can be high |
| Spending limits | Spend to the amount you hold in your balance | Spend to the credit limit agreed with the card issuer |
| Payment | Payment moves from your linked account very quickly or instantly to pay merchants when you shop | Card issuer pays the merchant in the first instance, you then repay the card issuer through a monthly bill |
| Interest and fees | No interest Transaction fees may apply depending on how you use your card | Interest is payable on outstanding amounts Cash advance fees, penalty and late fees can apply |
| Reward options | Some cards have rewards and discount options - but this isn’t universal | Cards may come with cash back, miles and reward options |
| Credit check required | Credit check not usually required | Credit check usually required |
As you can see - there are some pretty crucial differences between credit cards vs debit cards. We’ll unpick each card type and how they work, next.
Most banks will issue or offer you a debit card when you open a day to day account - or you can get a debit card linked to a specialist online account, like the Wise debit card which we’ll cover in more detail later.
With a debit card you’ll add money to your linked account - by making a bank transfer to the account or receiving your salary to it for example - and you can then spend and withdraw funds to the amount you’ve already topped up.
When you make a debit card payment, the money is deducted from your account balance more or less instantly, so you’ll always be able to get a good idea of how much money is in your account. That can make it easier to keep an eye on your money and manage your budget - plus there’s no interest to pay as long as you don’t accidentally run up an overdraft.
To order a credit card you’ll need to meet certain eligibility criteria - usually involving guaranteeing a fixed minimum salary and passing a credit check. The bank or card issuer will use these eligibility tests to decide if you’re sufficiently creditworthy for the card you want - if your application is declined you’ll need to pick a different card and reapply.
With a credit card you’ll be able to spend on account, to the maximum credit limit the bank or card issuer has set for you. At the end of the month you’ll get a bill which shows what you owe the card issuer, which you can repay immediately to avoid further fees.
If you don’t pay back the full amount you’ll need to cover interest charges on the outstanding amount, and could run into penalty or late fees if you’re unable to keep up repayments. That said, credit cards do come with some great perks - like options to spread the costs of purchases over multiple months, and some very good reward and cash back earning options, too.
Not sure which will work for you from debit card vs credit card? Check out this pros and cons comparison to help you decide:
| Pros | Cons | |
|---|---|---|
| Debit card |
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| Credit card |
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In the market for a debit card that can help you cut the costs of spending and withdrawing overseas? Check out the Wise debit card.
Open a Wise account online or in the Wise app, and order your linked international Wise debit card to spend all over the world. You’ll be able to hold and exchange 50+ currencies in your Wise account, with the mid-market exchange rate every time. Plus, spend in 170+ countries, with no extra fees for any currency you hold in your account. If you don’t have the currency you need the card can convert from you, with the Google rate and low fees from 0.41%.
Manage your account online or on the move through the Wise app - see your balance across currencies, get transaction notifications, freeze and unfreeze your card - so you’re in control wherever in the world you happen to be.
Pricing/fees: Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information
Debit cards are great for day to day spending at home and abroad, as they’re convenient to use, and it’s easy to stick to a budget. Credit cards can be handy for larger purchases or when you want to spread out the costs of a payment, and can come with some great reward and cash back earning options too.
Ultimately, credit and debit cards each have their own useful features - and a few downsides to be aware of. Which suits you best depends on what you’re trying to achieve. In fact, many people prefer to have both a credit card and a debit card, for different purchase types, and to maximise their options when it comes to spending - and saving - money.
For example you might want to consider getting a regular debit card from a Malaysian bank for day to day spending, plus a Wise debit card for when you travel and shop online in foreign currencies - and a credit card for those times when it makes sense to buy now and pay later.
Use this guide to help you understand the differences between debit cards vs credit cards, so you can pick the card - or cards - that work best for you.
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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