Debit Card Advantages and When to Reach for Your Debit vs. Credit Card

Debit and credit cards look nearly identical, enable you to make purchases more conveniently and can even offer rewards. But that’s where the similarities stop.

You likely have at least one of each card in your wallet and use them interchangeably, but there are several differences and advantages to consider that could substantially impact your finances. Here are the debit card advantages that make debit preferable to credit in some circumstances.

When Should You Use Your Debit Card Instead of Your Credit Card?

The convenience and protection of debit cards and credit cards are hard to beat, and you may not consider which to use when in the middle of making a purchase. After all, you’re still paying for the purchase with your money whether it’s now with your debit card or in the future with your credit card. However, there are some times when it’s better to reach for your debit card. Let’s take a look.

You Need Cash

When you need quick access to cash, you can use a debit card and credit card to withdraw money at an ATM. However, if you use your credit card at the ATM, it’s considered a cash advance and you’ll be charged interest on the transaction.

The interest you’ll accrue from using your credit card to withdraw cash at an ATM is often more than you would accrue if you carry a balance from month to month. Many financial experts advise against using an ATM to withdraw cash from your credit card account because it can be incredibly expensive, so this should only be done as a last resort. Additionally, interest accrues on cash advances starting from the day you withdraw the money from your credit card.

Debit cards, on the other hand, are either free with an in-network ATM or have a fee with an out-of-network ATM. If you need cash and can’t find an ATM nearby, many retailers offer the option to make a cash withdrawal with a purchase.

Avoid Merchant Fees

Some businesses, restaurants and online retailers charge a small fee when you use your credit card to make a purchase. While getting cash back on your credit card is nice, paying a 3 percent fee to use your credit card with a small business or online retailer can negate any benefits you may earn. Debit cards are often excluded from these merchant fees.

Additionally, if you’re traveling abroad, it’s important to look at foreign transaction fees for your credit card and debit card to determine which fee is lower before making a purchase.

Manage Credit Card Debt

When you’re using your debit card instead of a credit card to make purchases, you can manage and track your spending better. This is especially important if you’re struggling to pay off your credit card debt because using your debit card can help you better prevent overspending.

At this point, you may be thinking about the rewards that come with making purchases on your credit card. However, those credit card rewards are only beneficial if you’re paying off your credit card balance each month. Otherwise, you’re racking up interest from the balance carrying over from month to month — and spending even more.

Use Your Debit Card Advantages

Credit cards aren’t the only cards that come with rewards! With the right financial institution, your debit card can also earn you rewards.

For example, 7 17 Credit Union offers a rewards debit card that earns the cardholder points for everyday purchases. These reward points can be used online or at various retailers for merchandise and travel rewards.

Debit Card Advantages

There are several benefits of choosing to use a debit card over a credit card, including:

• Avoiding debt: Continuously using your credit card can rack up a high balance, making it difficult to keep up with payments and straining your budget in the process.
• No annual fees or interest: Making purchases with your debit card helps you avoid repaying hefty interest as well as annual fees from using a credit card.
• Rewards: Depending on your credit union or bank, your debit card may offer rewards. While the rewards may not be as extensive as credit card perks, using your debit card can help you better manage your budget and avoid taking on additional debt.

Ready for Your Debit Card to Do More?

Using a credit card can be beneficial because of the perks tied to the account. But it doesn’t have to be only your credit card that rewards you. Explore the debit card advantages available with a rewards debit card from 7 17 Credit Union.