Do You Use a Debit Card or a Credit Card?

Which card do you use, your debit card or your credit card? When I reach into my wallet, there is almost never a decision; I almost always reach for my credit card. I pay it off every month and I never need to worry about overdraft issues, plus I received cash back on my purchases. One of my cards pays me 1.5%, the other pays 2.0%. For every $5,000 I spend, I receive $75 or $100 — depending on which card I am using. Here’s a link to an article from our friends at “Money Under 30” laying out some very logical reasons why you should use your credit card instead of your debit card. Here is one reason why you might want to use your debit card though. If you shop at Target, they have a Red Card. It is tied to your checking account so essentially it is a debit card. The advantage is that they give you a 5% discount on most of your purchases (more info and exclusions in the Target Red Card are here.) Essentially, they are giving you back the fee they have to pay to the credit card companies.

NerdWallet looks into the legal ramifications of deciding which card to use: “…credit cards generally provide more protection against fraudulent activity. But, there are ways to mimic some of these protections with a debit or prepaid card. Deciding which is best for you will help protect your money whether you’re spending online or swiping in store…”

Our friends at WiseBread lay out various pros and cons in several different situations. They discuss which card is safer, which card is better for travel, which card could potentially hurt your credit score (hint: one these cards has the word credit in its name,) which provides better rewards.

The folks at Money Crashers offer a very clear and concise assessment of the pros and cons of each. There are many arguments for using and/or avoiding either card. Ultimately, they didn’t offer a definitive answer; it’s really personal preference.

My preference is always to reach for the credit card.

Photo credit: PersonalMoneyNetwork

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