Debit Card or Visa Card: Best Situations for Each

Lisa Sullivan

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Published on 11-08-2016

Categories: Articles

The practice of paying for something by writing a check or paying by cash continues to go by the wayside. More and more consumers today are using debit or credit cards to make their purchases. In fact, according to NASDAQ, the number of debit card payments grew from 8.3 billion to 47 billion in a twelve-year span.  Similarly, according to a Gallup survey, 33% of Americans have one to two credit cards on average. So, what are the best situations to use each of type of plastic?

When to Use Your Debit Card

Earn Interest

Today, many banks and credit unions offer their customers and members checking accounts that earn interest on balances as you utilize your debit card for each transaction you make. Of course, every financial institution has different requirements to earn that interest.

How important are “Real Time” transactions to you?

Most debit card payments, when used as a debit card, register immediately because the money is coming directly from your checking account and the money available in it. Whereas with a credit card, or your debit used as a credit card, there might be a 24-hour hold resulting in a “pending” transaction. Therefore, if you if you want to see the transaction reflected in your account immediately, use your debit card.

Also, debit cards provide easy access to cash through an ATM without the cash advance fees that are added to withdrawals made with your credit card.

If Credit Card Debt is a Problem for You

If you’ve accrued significant credit card debt, then use a debit card for transactions until you pay off that debt. Get a handle on your finances and then slowly begin building your credit again through the use of your credit card. In the meantime, debit cards are accepted most everywhere – including for travel expenses such as hotel and flight reservations as well as car rentals.

When to Use Your Credit Card

Increase Your Credit Score

Periodically using your credit card and paying it off on time (or early!) each month, will help you build your credit score…and you don’t have to use it for big ticket purchases to do that either. If you have a credit card that offers rewards (like cash back on gas or groceries, for instance), then use that credit card solely for that. Making smaller purchases while paying off your credit card on time makes it easier to manage too!

Need Purchase Protection or Better Security?

When making that expensive purchase (i.e. engagement rings, smart phones, computers, gaming consoles, etc.), protect it by using your credit card to pay for it. If an item should arrive damaged or broken (within the item’s grace period, for instance), most credit cards offer purchase protection so that you can repair or replace with little to no cost to you.

If you use your credit card to pay for travel expenses, there is some protection there as well. It depends on the card and what the protection offers.

Additionally, there is better security when using your credit card for those expensive purchases as well as online or at the gas pump. If you notice an unauthorized charge, it’s easier to dispute and receive a resolution. Not to mention, with a credit card the money never comes out of your account like it would if you had used your debit card making it less of a hassle to get to that resolution.

Rewards, Rewards, Rewards!

We briefly touched up on this in the section about increasing your credit score above, but let’s expand on this further. Whether you’re looking to get cash back on your purchases or rewards for travel, merchandise, shopping, etc., that’s another reason to use your credit card. Debit cards don’t generally offer rewards outside of a dividend at the end of the month. Use your credit card for purchases and in so doing, gain your rewards – whatever they may be!

These are just a few of the best situations in which a debit or credit card should be used. Can you think of any others? Please leave a comment below.



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