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When is it Better to Use a Debit Card?

Authored By: Community Focus FCU on 11/16/2020

Woman holding shopping bags and a debit card

When is it better to use a Debit Card?

“Debit or credit?”

It’s a question you probably hear every time you buy something in person. If you have the option of using either a debit or a credit card, is there a reason you choose one card over the other? Is there ever a wrong choice between the two?

There could be, depending on your situation.

How your cards work

It’s first important to understand how the two types of cards work.

Debit cards draw money straight from your checking account. You won’t get a bill later or pay interest on what you spend, but you could pay an overdraft fee if you spend more than what you have in your account. A debit card also allows you to get cash from an ATM, drawn from whichever account you choose (checking or saving).

Credit cards allow you to borrow money that must be repaid, with interest if you don’t pay your entire credit card bill when it comes due. You will have a credit limit on each credit card—the maximum amount of money you can charge to a card, but it will likely be much more than you have in your checking account.

Credit cards have many perks, like fraud prevention, helping you build credit, earning perks (like cash back or airline miles), extended warranties on electronics, and additional insurance on air travel or car rentals.

If someone steals your debit card information and withdraws money from your account, there’s a good chance that money is gone forever, although your credit union may offer additional protection up to a certain dollar amount. However, with a credit card, you are protected against fraudulent charges by federal law, and you can dispute any charges by dishonest sellers.

Even with all of the advantages of using a credit card, there are times when it might be smarter for you to use your debit card.

If using a credit card incurs a fee

It’s not uncommon for a surcharge to be added to your bill if you use a credit card. Examples include using a credit card to get money out at an ATM, to pay taxes, or to pay a tuition bill.

If you’re buying from a small business

Businesses must pay a credit card processing company money to offer credit cards as an accepted form of payment. To help offset this cost, the store may set a credit card minimum, ensuring you spend enough to make the credit card charge worth it. Using your debit card when shopping from small, local businesses helps the business keep more of the profit, helps keep you from overspending to meet that purchase minimum, and helps prevent the business from increasing its overall prices to compensate for the credit card processing fee.

If you’re in credit card debt

If you’re currently facing deep consumer debt on your credit cards, or have only recently paid off your credit card debt, or struggle to resist spending beyond your means, you should be reaching for your debit card more than a credit card.

When you run out of money in your checking account, your credit union won’t let you spend any more! It’s a natural prevention to overspending!


An easy way to decide which card to use in the moment is to match the card type to your goal.

If you’re avoiding debt, use your debit card.

If you’re trying to build credit and can pay off your bill each month, use a credit card.

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