This Is When You Should Use Your Debit vs. Credit Card (2024)

FAQs

This Is When You Should Use Your Debit vs. Credit Card? ›

Debit or Credit: Which Should You Get? The bottom line is that you need both a debit card and a credit card. A credit card should be your primary spending vehicle, with the debit card being your primary pathway to cash.

Debit or Credit: Which Should You Get? The bottom line is that you need both a debit card and a credit card. A credit card should be your primary spending vehicle, with the debit card being your primary pathway to cash.

Credit may also help you deal promptly with costly emergencies. Many consumers turn to credit when faced with unexpected home or auto repairs, as well as medical emergencies.

Why would I use a debit card? Debit cards let you buy things without carrying cash. You can use your debit card in most stores to pay for something. You just swipe the card and enter your PIN number on a key pad.

With a credit card, if the full amount spent is not repaid when you receive your bill, you'll be charged interest on the outstanding amount. Debit cards carry less risk of getting into debt, particularly if you don't have an overdraft, but they can limit your financial flexibility.

If you don't have enough funds in your account, the transaction will be declined. When you choose to run your debit card as credit, you sign your name for the transaction instead of entering your PIN. The transaction goes through Visa's payment network and a hold is placed on the funds in your account.

credit card: which is safer to use online? Because debit cards withdraw money from your checking account, a criminal who gets your account information or PIN could empty your account. For this reason, credit cards are considered safer to use online because funds aren't directly taken out of your accounts.

“The general rule is: Don't use your credit card for anything that you can't pay for in full when the bill is due,” Priya Malani, a founding partner of Stash Wealth, a millennial-focused financial-planning firm, tells Select.

They advise against using your credit card to pay for things like rent, gas, cash advances, medical bills, buying a car, and expensive events like weddings. While it can be tempting to put everything on your debit card for budgeting purposes, there are financially savvy reasons to swipe your credit card.

Why do people use debit instead of credit? ›

Principally, the 50 percent of debit-card users who revolve credit-card balances would pay interest to charge purchases on the margin and hence might rationally choose to use debit rather than credit to minimize transaction costs.

Using a debit card is also easier and faster than writing a check. It's a good way to pay for purchases without having to pay interest, as you would if using a credit card with an outstanding balance.

From a legal perspective, credit cards generally provide more protection against fraudulent activity. But, there are ways to mimic some of these protections with a debit or prepaid card. Deciding which is best for you will help protect your money whether you're spending online or swiping in store.

More people have debit cards -- but it's close

That's 93% of U.S. adults. Credit cards are also common, as 214 million U.S. adults (82%) had one or more in 2022. Overall, 28.7 million more Americans have debit cards than credit cards.

Credit cards have a few disadvantages, such as high interest charges, overspending by the cardholders, risk of frauds, etc. Additionally, there may also be a few additional expenses such as annual fees, fees of foreign transactions, expenses on cash withdrawal, etc. associated with a credit card.

And many people have both a credit card and a debit card in their wallet. For example, if you're trying to pay off credit card debt, it might make sense to pay with a debit card. That way, you can only spend money you have. And you won't rack up more charges—that may accrue interest—on your credit card.

Yes, it is possible to have both a credit card and a debit card linked to the same bank account. A debit card is linked to your checking or savings account and allows you to make purchases by withdrawing money directly from your account.

Debit cards lack the same robust protections as credit cards, so you might be at greater risk of fraud with multiple debit cards to manage. Having multiple checking accounts can complicate your finances.