4 Times to Skip Your Debit Card and Use a Credit Card Instead (2024)

Got a debit card in your wallet? The data says you probably do -- research from The Motley Fool Ascent found that in 2021, 93% of American adults had a debit card (according to the Federal Reserve). A debit card is a convenient way to pay for purchases, but it's also a direct link to money in your bank account.

Credit cards don't link to your own money; instead, when you use one, you're borrowing from the card's issuer and paying it back when you pay your bill. Consequently, if someone gets your credit card information and runs up charges, you will have to deal with the inconvenience of reporting the fraud and replacing the card, but you likely won't be out any money of your own. The best credit cards have $0 fraud liability, too.

With this important difference between debit and credit cards in mind, here are a few instances in which you should opt for a credit card over a debit card.

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You certainly can use your debit card for online shopping, but it's not a good idea for several reasons. Your debit card is linked to your bank account, so if your card number is stolen or leaked in a data breach, you could lose all the money in that account.

Depending on when you report the problem to your bank, you may not end up losing any money in the process. But it will still take time for your bank to investigate, and you could be cashless in the meantime.

Purchase protection is another reason to opt for a credit card over a debit card. If you order something and it never arrives, or you were misled about a product and want your money back, you may have little recourse with a debit card. But if you've used a credit card, you can file a dispute with the issuer, who will then go to bat on your behalf.

2. Hotel and rental car reservations

The issue with using a debit card to reserve a hotel room or rental car is the temporary authorization hold. It's common for hotels and rental car agencies to put a large hold on a payment card, in case the customer causes damage to a vehicle or runs up a big room service bill.

If you've used a debit card, you could find yourself unable to access hundreds of your own dollars thanks to a hold.

3. Gas stations

Personally, I'd never use a debit card to buy gas. For one, I have a credit card that pays bonus cash back on gas purchases. For another, gas stations are notorious for being vulnerable to credit card skimmers on the payment systems at each pump.

Gas stations are busy places, and the employees likely don't have time to individually monitor the comings and goings at each gas pump. Thieves use skimmers to steal the card information of the people who pay at the pump. Since a debit card is directly tied to your bank account, you could encounter a lot more hassle if someone steals that information.

While your bank will investigate and you may not lose money if you report fraud immediately, you could still potentially lose access to your own money for a period while your bank does its job. (And since gas stations also sometimes put a hold on payment cards, you could have this happen even if there's no fraud with the transaction or afterward.)

For this reason, it's best to use a credit card to pay for gas -- or go inside to pay an employee directly.

4. A big purchase

If you're buying a big-ticket item, like furniture, a computer, a smartphone, or something else expensive and potentially breakable, using a credit card for the purchase is the better choice.

Remember, the best credit cards come with purchase protection. If your new item is stolen or damaged, and the retailer is unwilling to help you, you could potentially file a claim with your credit card company and get your money back.

Is it ever worth using a debit card?

Personally, I don't use debit cards for many purchases these days, and instead do my everyday spending on credit cards. Credit cards can help you build credit and earn rewards on your spending. Plus, they're not tied to your bank account, meaning the risk of loss from fraud is less. But this doesn't mean debit cards can't still have a place in your wallet.

If you struggle with credit card debt, using a debit card is absolutely better. You won't be borrowing money to use one, and knowing that you're limited to the money in your linked bank account can keep you from overspending.

Another reason to have a debit card in your wallet is access to cash. Many of them function as ATM cards. If you pay in cash frequently, it's handy to keep your debit card on hand so you can take out more as needed.

Debit cards have fewer consumer protections and are far less likely to pay rewards on spending than credit cards. They could still be a big part of your money management, though. Just think twice before using them in the above situations.

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4 Times to Skip Your Debit Card and Use a Credit Card Instead (2024)

FAQs

4 Times to Skip Your Debit Card and Use a Credit Card Instead? ›

When you use a debit card, funds are often drawn from your checking account or another linked account that same day. When you use a credit card, you're borrowing money from the credit card issuer and adding to a balance that you can pay off each month or carry while paying interest.

What happens when you use a credit card instead of a debit card? ›

When you use a debit card, funds are often drawn from your checking account or another linked account that same day. When you use a credit card, you're borrowing money from the credit card issuer and adding to a balance that you can pay off each month or carry while paying interest.

Is a credit card better than a debit card? ›

Bottom line. Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.

How many times do you need to use your credit card? ›

How often should I use my card to keep it active? While it depends on the issuer, you should use your card at least once every few months to keep it active. Even a small purchase is enough to show your card company that you're still interested in the card.

Is it bad to have a credit card and not use it often? ›

Not using a credit card isn't necessarily a bad thing. However, it can come with some unintended consequences. Although charging inactivity fees is no longer legal, issuers have other options at their disposal — some of which could affect your credit score, your available credit and more.

Is it smarter to use a credit card over a debit card? ›

Credit cards are safer to carry than cash and offer stronger fraud protections than debit. You can earn significant rewards without changing your spending habits. It's easier to track your spending. Responsible credit card use is one of the easiest and fastest ways to build credit.

Why do people use credit instead of debit? ›

Credit cards give you access to a line of credit issued by a bank, while debit cards deduct money directly from your bank account. Credit cards offer better consumer protections against fraud compared with debit cards linked to a bank account.

What is worse losing a debit card or credit card Why? ›

Nearly all of today's top credit cards offer zero fraud liability on unauthorized charges, which means you won't owe a penny on any charge determined to be fraudulent. Debit cards also limit your fraud liability but require you to report your lost or stolen card within two business days to limit your liability to $50.

Which is safer, a credit card or a debit card? ›

Credit cards are generally the better option for both everyday purchases and major purchases because they offer better protections and aren't tied directly to the cash in your bank account. Plus, you may be able to use a rewards credit card to earn cash back, miles or points on all your purchases.

What are 5 disadvantages of debit cards? ›

Here are some cons of debit cards:
  • They have limited fraud protection. ...
  • Your spending limit depends on your checking account balance. ...
  • They may cause overdraft fees. ...
  • They don't build your credit score.
Dec 9, 2021

What happens to a credit card if you never use it? ›

If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.

What happens if I use 90% of my credit card? ›

Helps keep Credit UtiliSation Ratio Low: If you have one single card and use 90% of the credit limit, it will naturally bring down the credit utilization score.

How long can you keep a zero balance on a credit card? ›

How Long Can You Keep a $0 Balance on a Credit Card? If your balance is zero because you use your card and pay any balance off in full at the end of every billing cycle, you can keep the card indefinitely. But if your account remains inactive for some time with a zero balance, the issuer may cancel your account.

Is having zero balance on a credit card good? ›

In fact, having a zero balance or close-to-zero balance on your credit cards can be beneficial in many ways. A few of the most important benefits are: reducing debt, improving one's credit score and avoiding late payments and/or interest charges.

Is it better to close a credit card or let it go inactive? ›

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.

Does cancelling a card hurt credit? ›

Before you close a credit card account, consider the following: Closing a credit card could lower the amount of overall credit you have versus the amount of credit you're using (your debt to credit utilization ratio), which could impact your credit scores.

What happens when I use credit on a debit card? ›

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. The transaction usually settles from your account within two to three days.

What are the disadvantages of using a credit card over using a debit card? ›

Disadvantages of Credit Cards:
  • Irresponsible use or inability to meet minimum payments can hurt your credit score.
  • High-interest rates lead to paying more in the end.
  • Easy to spend more than you can afford.

What can you not use a credit card for? ›

Purchases you should avoid putting on your credit card
  • Mortgage or rent. ...
  • Household Bills/household Items. ...
  • Small indulgences or vacation. ...
  • Down payment, cash advances or balance transfers. ...
  • Medical bills. ...
  • Wedding. ...
  • Taxes. ...
  • Student Loans or tuition.

Can a bank take money from your account to pay a credit card? ›

For example, federal law won't allow a bank to offset your deposit account to pay off your consumer credit card account.

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