Why you should use a debit card instead of a credit card? (2024)

Why you should use a debit card instead of a credit card?

No Annual Fee

No debt or high interest

Because your debit card instantly deducts money from your checking account, no debt adds up like when you use a credit card. And because you aren't borrowing from a lender, checking accounts don't charge interest each month (or allow you to overspend in the first place).

As well as enabling you to spread the cost of big purchases, a credit card gives you more protection than a debit card. Your card provider is jointly liable with the retailer so, if the goods are faulty or the company goes bust, you're entitled to claim your money back.

A debit card lets you spend money from your checking account without writing a check. When you pay with a debit card, the money comes out of your checking account immediately. There is no bill to pay later.

Debit cards have fewer added benefits

Some credit cards feature money-saving benefits, such as extended warranties, price protection, travel insurance, primary rental car insurance and more. You could be missing out on these extra protections just by paying with the wrong piece of plastic at checkout.

Cons of credit cards include: Potential high-interest rates and fees. Temptation to overspend. Risk of accumulating high debt.

Flexibility. Cash is not accepted online. If you have a debit card, then you can use this just about anywhere that accepts online payments. With a checking account you can use your Visa® debit card anywhere you want, so you have no limits when it comes to the purchases you want to make or the products you want to buy.

Disadvantages of Using a Debit Card

And while debit cards may not have annual fees, you should be aware of other fees that can be associated with them. Monthly maintenance fees on checking accounts, overdraft fees, NSF fees, and out-of-network ATM fees can all be associated with using a debit card.

Credit cards often offer better fraud protection

With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used. You could be liable for much more for unauthorized transactions on your debit card.

If just your debit card number is stolen and not the card itself, you are not liable for unauthorized charges, as long as you report them within 60 days of receiving your statement. In general, credit cards offer better fraud protection.

Is there a downside to using a debit card?

Here are some cons of debit cards: They have limited fraud protection. According to the Federal Trade Commission, if your debit card is stolen and you notify your bank within two days, you could be responsible for up to $50 of any fraudulent charges.

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 cards make it all too easy to overspend. Buying on credit can also make your purchases more expensive, considering the interest you may pay on them. Getting into too much debt can not only hurt your credit score but also strain relationships with family and friends.

Once the machine has all your information from the card's magstripe, it is now ready to contact the financial institution in question – either your bank for a debit card or the credit card holder for a credit card – to try and authorize the transaction.

They use their credit card for most purchases

It turns out many wealthy people use plastic for most of their purchases. A recent survey found 49% of Americans with a net worth over $1 million have a travel rewards credit card, compared to 23% of Americans with a net worth below $1 million.

A debit card is great for everyday purchases like gas, groceries, meals, clothing, and more. As long as you have enough money in your account, debit is convenient and effective (remember, using a debit card removes the money immediately, so there should be enough in the account to cover the expense).

Though it isn't always avoidable, paying with a debit card at retail stores can make consumers vulnerable to skimmers. An alternative to swiping your debit card is using a contactless payment method.

Other types of card damage

Dirt and oils can also cause issues with your magnetic strip, while prolonged exposure to liquids may also damage EMV chips — although most credit and debit cards utilize water resistant designs. Keep in mind: Your card's magnetic strip can also be damaged by heat.

Do debit cards get hacked more than credit cards?

Which Is More Secure: Debit Card or Credit Card? Although both debit and credit cards offer fraud protection, credit cards are more secure than debit cards since they offer better protection.

Skimming. Identity thieves can retrieve account data from your card's magnetic strip using a device called a skimmer, which they can stash in ATMs and store card readers. They can then use that data to produce counterfeit cards. EMV chip cards, which are replacing magnetic strip cards, can reduce this risk.

Debit card payment protection

You don't get protection from Section 75 if you buy goods on a debit card – this is because they are not part of a credit agreement. However, you might be able to make a claim for a refund under Chargeback, which we cover in a section below.

When you use your debit card, your money is withdrawn directly from your checking account. But since debit cards are not a form of credit, your debit card activity does not get reported to the credit bureaus, and it will never show up on your credit report or influence your score in any way.

If you notify your bank or credit union within two business days of discovering the loss or theft of the card, the bank or credit union can't hold you responsible for more than the amount of any unauthorized transactions or $50, whichever is less.