With the rise in popularity of credit cards and debit cards, over 40% of offline transactions are now conducted using plastic over cash. With this set to rise to over 2/3 thirds by 2012, the question remains – should I be using a credit card or debit card? For most, the answer is far from simple, and comes as a result of a number of factors, such as the size of a transaction, the transaction type and your current liquidity. With so much to consider, we have prepared this guide to ensure that you are aware of the factors that influence the fundamental choice – debit card v credit card.

Credit Cards Advantages

1. Should you complete a purchase with your credit card, your credit card company will provide a dispute resolution service should things go wrong. They will actually refund you in the interim until they are able to find evidence to suggest either party was correct.

2. Strapped for cash? If you are unable to finance a purchase, but will have the capital in around 1-8 weeks, then a credit card could be for you, if you are aware of the costs that you will incur for borrowing.

Credit Card Disadvantages

1. The inherent disadvantage in credit cards is that it is all too easy to get yourself in a mountain of debt. To avoid this, you must only spend with a credit card, what you know that you can afford.

2. credit card theft and issues relating to this are on the rise. Although you may be covered for a large amount of the transaction, this can cause worry and stress to credit card users.

Debit Card Advantages

1. You can only spend money you have. With a debit card, you will not be able to spend money that is not available in your bank account, this means that you will never be in red, and therefore the risk of debt spiraling out of control, is less of a worry to you.

Debit Card Disadvantages

1. Should you complete a purchase online and things go wrong, you will have nowhere to go apart from the merchant. That is why it is strongly recommended that a credit card is used for large scale, online purchases.

2. If you do not have the cash upfront for a purchase then you may find yourself unable to finance a transaction. If you had a credit card then you would be able to do this.