5 Times You Should Use Your Debit Card Instead of Your Credit Card

In this increasingly cashless world, we rely heavily on our credit cards for many day-to-day purchases. But while credit cards are a convenient means of quickly paying up, it may be time for you to start pulling out your debit card instead. While debit cards look similar to credit cards, paying with one immediately withdraws cash from your bank account rather than borrowing money. This major difference, among other factors, makes using a debit card preferable to credit cards in some specific circumstances. Here are five times you should use your debit card instead of your credit card.

To Withdraw Money

Did you know you can use a credit card to withdraw money from an ATM? But just because you can doesn’t mean you should. Withdrawing money using credit is considered a cash advance, which means incurring immediate interest in a flat fee or a percentage of the withdrawal. Debit cards, however, incur no withdrawal fees if you use an ATM within your bank’s network. Certain banks may even reimburse you for out-of-network fees if you’re forced to use your debit card at another bank's ATM.

To Avoid Merchant Fees

One of the biggest drawbacks of using a credit card is that many retailers charge a transaction fee between 1.5% and 3.5% on average. The vendor implements this fee to help cover the cost of processing credit card payments, but for the consumer, it’s yet another annoying hidden fee. Thankfully, you can avoid transaction fees by paying with your debit card. Since debit cards withdraw money directly from your bank account, they mean less risk for the vendor.

For Better Money Management

Credit cards can be both a blessing and a curse. You can swipe your card repeatedly without immediate repercussions, but you may realize you don’t have enough to pay off your credit card bills when your bank statement arrives. If you struggle with money management, using a debit card for purchases can help keep you on a budget since you cannot spend more cash than you have in your bank account.

To Save on Interest

The average interest held in the United States sits just below 25%. The longer you maintain a credit card balance, the more likely you will accrue interest. However, debit cards accrue no interest since money is taken directly from your checking account. While you can’t avoid all interest, switching out your credit card for a debit card to make larger purchases is a great way to save on your credit card bill in the future.

To Take Advantage of Rewards

Much like credit cards, some debit cards offer rewards like cash back. This is a great option for people seeking a rewards card without opening a new credit card account. Be forewarned that very few banks offer debit cards with additional rewards, though they’re not impossible to find. If you’re successful, using your debit card may bring more money back into your pocket while avoiding unnecessary charges.

_{Feature Image Credit: JLco - Julia Amaral/ iStock}