How to Choose Which Debit or Credit Card to Use For Purchases

Most purchases can be made with either a debit card or credit card, and there are certain times you might choose one or the other. Here’s what to consider when deciding whether to use a debit or credit card for a specific purchase.

How you’ll actually pay

Debit cards and credit cards fundamentally differ in how you actually pay for purchases.

Debit cards deduct the cost of purchase directly from an associated checking account, where you must have enough funds available to make the purchase. Credit cards record the purchase and then give you a certain number of days to make a payment on the card, after which the charge will begin collecting interest.

Paying for purchases before you have the funds in your account generally isn’t advisable. If you have the funds and want to avoid any interest, use a debit card. A credit card might be necessary if you’re faced with an emergency expense and don’t have the necessary funds. You might also use a credit card if you have substantial savings and don’t have to worry about whether you can pay for the purchase.

Whether you need protections

You may want special protections for some purchases, and special protections are normally only available if you use a credit card. For example, credit cards might offer fraud protection, rental car insurance, travel insurance, or other protections within their standard terms and conditions.

Even if you usually use a debit card, a credit card could make sense when buying from an unknown retailer, renting a car, or traveling.

What offers cash back

Some cards offer cash back or other rewards on purchases. Taking advantage of these can add up to significant savings in the form of rebates, as you may get a little back each time you swipe, enter or insert your card.

Have a debit card and a credit card

Since both debit cards and credit cards are preferable for certain purchases, many people decide to have at least one of each.

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About the Author: Scott Brodie is a freelance writer covering education, insurance and finance. He is often found with his cup of coffee and faithful dog at his side