I know that these two types are very similar. I can’t find many differences so can’t make up my mind what to choose. Need some help.
Both types will will allow you to "Restore" your data to it's last backup state - but for "Incremental" backups, the files for the last full backup plus ALL of the incremental files must be in good condition and readable for the restore to work. With a "Differential" backup, only the last full backup plus the most recent differential file are needed to be in good condition and readable for the Restore to be successful. Since, typically, we rarely test the condition of our backup files - this is a significant difference in reliability. One "dead" incremental file and you're in deep trouble.
As Bruce and Jan indicate, this is not entirely an either/or proposition. Incremental backups are the quickest and smallest, as they only include the very latest changes to your data and some systems (e.g. Apple's Time Machine) work purely on an full + incrementals basis.
Differentials, while bigger and slower, offer a degree of redundancy (since any file changed since the full backup is copied at every backup) and it can be easier to recover files with them (this depends greatly on the backkup & recovery software though).
What it comes down to is your data backup regime, and the rate of change on your computer. If you only do a full backup rarely, and your data changes a lot, then differentials will be relatively slow and take up a lot of space, but will offer significant redundancy. but if your data changes slowly (e.g. if it's mostly just typed documents) then there will be little to choose between incremental and differential. Look at your data, analyse how much you have in total, what the rate of change is and decide how often you are going to start a new full set (taking into consideration whether you're using just one backup drive or multiple ones) and then make your decision.
You can see a short comparison between differential and incremental backup in the below link -
This article from Acronis might answer your question:
Which to chose mostly depends on the convenience your solution offers for restoring and the storage you have available.
differential always and only backups data that has changed since the initial (full) backup
incremental backup always and only backups data that has changed since the last backup
While both strategies take significantly less data than full backups incremental will save even more space than differential over time.
At some point in time 50% of your data will have changed since the initial (full) backup so the differential backup will have the size of all the data on your source. The incremental on the other only has to backup what has changed since the last one so even after e.g. half a year the backup will only be a percentile of the original data (or of a differential backup for that matter).
A full restore to the latest data would require:
differential - the first (full) backup and the last differential one
incremental - the first (full) backup and all following incremental ones
If your software or solution requires a lot of manual work and very little automation/GUI than differential would be easier to locate and restore data (versions).
It should also be noted that the various types of backups are generally used together on a fixed schedule to get better blend of faster backups (incrementals) and faster backups (full backups).
For example, a portion of my data is done on the following schedule: Full backup is done the last day of the last month of the quarter. Incremental backups are done daily with a differential on the last day of the month if we are not at the end of a quarter. My backup target is another hard drive in a docking station and my backup software is intelligent enough to be able to cycle through all of the required incrementals and differentials automatically during the restore process. I can also merge incrementals and differentials into the previous full backup if desired without having to take the time to perform another full backup. In addition to the current cycle, I keep the full backup and differentials from the previous 2 quarters + the previous full backup (made 9 months before the start of the current cycle). For this one I generally have less than 1 GB of changed data per quarter. The worst-case restore (drive dies on the last day of any month prior to the new full backup) would be the last full backup, the last differential, and 30 incrementals. My last test restore took about 2 hours for the restore of the full backup and 18 minutes to run through the differential and incrementals (13).
On a busier system, the cycle is much shorter. For my OS partitions, they are simply imaged whenever there have been significant updates or software installs/uninstalls and I keep the 3 most recent images.
Also, remember to do test restores of your backups. After all, backing up your data is a useless endeavour if it cannot be restored.
I meant to say "At some point in time 50% of your data will have changed since the initial (full) backup so the differential backup will also have half the size of all the data on your source."
I agree with Bruce, it is a good idea to use multiple methods in your backup strategy. The complexity is pretty much up to you and how mission critical your data is.
Another point to take into account is how far back you want your backups to go. While storage doesn't cost much it is not unlimited. If you find yourself in need of space and therefor forced to "restart" your backup quite regularily you may want to alter your strategy.
For example if you created a full backup of 2012 but your incremental/differential backups only cover the last 4 months (Sep. - Dez) you basically have 8 months of possible data loss as anything that was created after 2012 but deleted/overwritten before September cannot be restored.