Credit vs Debit: Which Card Should I Use?​

oth credit cards and debit cards allow you to manage your money more efficiently than carrying around wads of cash. So, which one is the right choice? The answer isn't that simple.

Below, we will break down when it's best to use each card so you can find the best option for you and your spending habits.

Credit cards offer rewards points.

Debit cards are great for everyday spending, but credit cards have some benefits that make them worth considering.

With a debit card, you're only spending money that's already in your account. With a credit card, you can spend money that you don't currently have—but if you pay off the bill every month, there are no interest charges.

With a debit card, you get cash back on your purchases. Debit cards also offer rewards points that can be redeemed for gift cards or other perks. Credit cards don't offer these types of rewards programs.

However, with a credit card, you may be able to earn rewards points on things like flights or hotels through an airline or hotel loyalty program (this is usually only available if you charge at least $1,000 per year). The other advantage of credit cards is that they help build up your credit score over time (you can check yours for free by taking advantage of our free trial).

Debit cards offer a safety net with overdraft protection.

So, if you're looking for the best deal on travel, credit cards can be your best friend. But what about when it comes to everyday purchases? Debit cards are actually a better choice there. They're safer and cheaper than credit cards in many cases—and they also offer some additional benefits that aren't available with credit cards.

Why? Because they don't come with all those fees! If you want to buy something but don't have enough money in your bank account or checking account yet, most debit cards let you use the money in your savings account to pay for it (this is called "overdraft protection"). If this happens and the money doesn't clear right away, then any charges will be declined until the funds do clear—so there won't be any late fees or interest charges on top of whatever else was charged by merchants like Amazon or Walmart!

Debit offers reward points but they're not worth as much as with credit.

The rewards points you earn with a debit card are not worth as much as the rewards you can earn with a credit card. It's all about the value of the rewards points in relation to your spending habits.

Let's say you spend $10,000 on your debit card each year, and that earns you 100 reward points per month (roughly 1 point for every $1). At that rate, it would take about 36 months—or 3 years—to earn enough points for a low-value gift card or airline ticket. That's not exactly fast food money!

In contrast, let's assume the same person spends $20,000 on their credit card over the course of two years—and gets 5% cash back each time they buy something (for simplicity's sake). Assuming no annual fees and no foreign transaction fees either way, this means he or she will have earned $900 in cash back over two years spent using both types of cards ($450 + 450 = 900). Cash is king!

Debit cards have lower transaction fees.

Debit cards have lower transaction fees than credit cards. Debit card transactions are processed through the Automated Clearing House (ACH), a system used by the banking industry to move funds from one bank account to another. The ACH charges a flat fee for each transaction, around $0.15 per debit card transaction.

Credit card transactions, on the other hand, are processed through Visa or Mastercard, which charge a percentage of each sale as well as an interchange fee—a fixed fee paid by retailers for accepting cards from those networks.

Credit cards can be used at more places than debit cards.

Debit cards are accepted at fewer places than credit cards. This can be a big problem if you're in a store and your purchase is more than the cash in your wallet. It's also annoying when you want to use a debit card for something online, but find out it won't work because it's from another country or has some other issue.

Credit cards are accepted just about anywhere—and there are even more places where they're not accepted as well! If you want to pay with as little hassle as possible, using a credit card is the way to go.

Conclusion

You can see that there’s no “right answer” when it comes to deciding on the best card for your wallet. But we hope that this article will help you choose the right option based on your particular needs and preferences. The important thing is to be informed so you don’t end up with any surprises down the road!