Hello, so I currently have a secured credit card with Navy Federal Credit Union, the limit is $1000. I've read several times that I should never use my debit card to pay for anything, to use my credit card for everything. And just pay off the entire balance at the end of the month. Is this true? Or is there a better way to go about things. Thank you.
Edit: thank you everyone for the replies! Looks like it's only credit card use from now on!
Is it true I should never use my debit card?
byu/Doctor_Nunez inpersonalfinance
Posted by Doctor_Nunez
29 Comments
I never do.
I get 6% back on groceries
5% on gas, 3% restaurants. 3% transit.
Anything else I get up to 2% but at a minimum 1.5%
If you used a debit card you get 0% all the time. Just pay the card in full every time. Treat it as you would a debit card. Also you dont get the same protections with a debit card as you would a credit
> Is this true?
Yes. Banks will use every resource at their disposal to get their funds back in case of fraud. When it’s your funds, they’ll work at a snails pace.
A debit card is directly linked to your bank account with less protections than a credit card. It should never be used.
Now if you can’t be responsible paying your credit card balance then that’s a different conversation
In an ideal world, your debit card would only be used to pull cash out of ATMs.
But with that low of a credit limit, you may not be able to put all of your spending on credit cards, so you may need to operate in a less than ideal way.
The protections alone make a credit card far more secure. Think of it this way: if someone skims your credit card info, it’s the bank’s problem; if someone skimss your debit card, it’s your problem as all your money is gone.
CC offer a much higher level of consumer protections. You also are not liable for fraud on a credit card. Well technically you can be liable for up to $50 but I’ve never had a credit card company try.
The only real downsides to credit cards is self-control. A debit card is good for somebody who does not have the self-control to not buy things they can’t afford. Given a debit card will not allow you to buy something if you don’t have the money to pay for it. But if you are financially literate enough to never buy something on a credit card that you cannot pay off when the statement comes and there by far hands down the better form of payment in 99% of scenarios.
If you chopped off both my hands, I’d still have enough fingers left to tell you how many times I’ve used my debit card in the past 20 years.
Credit cards only.
“Never” is a strong word but there are two good reasons to prefer using your credit card for purchases:
* often there are better rewards when using a credit card
* if there is any fraud, it’s generally less inconvenient if it’s a credit card. Every time you use a card there is some potential for it to be stolen / skimmed.
The main problem with a credit card is that it’s possible for you to spend money you don’t have. For some people that can be a real problem. With a debit card you can only spend money that is actually in the account.
its good advice because in cases of fraud, the CC company is on the hook vs you being on the hook with a debit card.
With a Debit card, the bank will generally shrug and say its your problem that your card was compromised. With a CC, the their fraud department will do the investigation and return your money.
Also if you need to do a chargeback, you can only do it on a CC.
I’ll go against the grain here and challenge you to go a quarter using the credit card and then the next quarter just using a debit card. I’ve read studies that say we spend more overall using a CC. If you spend 15% more, take that into consideration too.
I never use my debit card. I don’t even carry it with me.
If someone steals your debit card they can empty your bank account.
Ideal strategy is you should have a card that has rewards on food and gas. 2 things everyone is going to buy. Rewards 1-3% cash back is effectively a discount on something you have to buy. In that case you should use credit.
If it’s a secure card and doesn’t offer rewards make one purchase a month then pay it off.
Have long have you had the “secured” credit card? If it’s been over a year, then ask the CU to change it to a standard CC and increase the limit. Do this in person, and let them know that you want to increase your credit score. Just keep using it the same way that others have suggested (pay it off every month).
Don’t fall into the thinking that you have to use a certain amount of your available credit line every month. This is FALSE! I haven’t used over 10% of my available credit in many, many years, and still have a very high credit score.
I don’t even own a debit card. When I opened my current bank account I specifically requested an ATM only card. If you have a credit card there’s literally no reason to have a debit card: all you’re doing by having one is making it easier for a thief to directly spend the money in your bank account over the internet. That’s physically impossible with my ATM only card.
I never use my debit. They can’t close the account it’s associated too anyway. So I use my CC and just pay the end of the month. I like the analytics it gives me at years end. Not to mention the fraud protection and cash back/pts
I don’t even OWN a debit card and when my Bank has sent me a combination ATM/Debit Card I have had them cancel it and send me a card that is ONLY an ATM card.
With a credit card you don’t owe ANYTHING if there is fraud and the Bank investigates
With a Debit Card you typically have money withdrawn from your account and then have to prove to the bank that there was some kind of fraud.
This could theoretically create a situation in which checks – especially ones that are on autopay have insufficient funds unless you keep high balances in checking.
I use my credit card for essentially everything and pay what I owe every month. I earn points – the main card I use gives me 5% back on amazon purchases and have piece of mind in terms of knowing what is in my checking account all the time. Also if there is a dispute with the merchant, you don’t owe anything on that transaction until the dispute is resolved.
Helps your credit score to have a low balance.
Depends on the bank. I had $500 fraud on my debit card that the bank rectified in just a few days; the money was back in less than 48 hours.
For the most part, I use both debit and credit and I’ve never really had any trouble with debit anywhere. I should also add that it always works when I’m overseas while credit cards can be declined at random times for bizarre reasons.
Never use mine, unless to get cash
I set up a separate Debit account with an online bank, and there is never more than $400 in there, usually more like $50. It’s just for Starbucks and lunches. Or just use credit and you are covered.
If some scammer gets your debit card number, etc. and they make a charge that drains your checking account, and you file a claim with your bank, it might take up to 6 weeks for them to get your money back. That’s 6 weeks you can’t pay your rent or your car payment.
If a scammer charges on your credit card, it’s the banks money. Your checking account still has all it’s money and you can pay your rent and car payment.
I recommend using your credit card and not even waiting for end of month, just make payments as transaction post- by doing this you never carry a balance and get charged interest and still create credit history and get the perks of your credit cards
You’ve got a lot of responses, but yes 100% for the protection alone. The number will be stolen and you will get fraudulent charges. It is simple to dispute it and it does not take real money (Ah No, I did not buy gas 2000 miles away).
Just pay the credit card often, the limit will go up soon. I pay mine weekly since I really don’t want to carry a balance.
Good on you for using a Credit Union, and a good one too.
I’d hate to hijack this thread, but what if the debit card is attached to Apple Pay? Isn’t it encrypted? I usually pay cash for everything outside of online purchases where I usually use PayPal or Apple Pay
Debit card transactions ran as “credit” and do not enter pin = protected like credit cards. Debit card transactions ran as “debit” and PIN is entered = hassle if fraud but can only be fraud if someone knows your pin. NEVR SHARE YOUR PIN.
My own rules are to only use a debit card at ATMs for banks or CUs I recognize/know (sorry, antique convenience store ATM with a smiley that rolls acrossed through screen) and at grocery stores who only take debit cards, like Winco used to.
I use CCs everywhere else unless the swipe fee is more than 3%, then I’ll usually use cash.
My CCs are set to autopay.
Also, consider that different tiers of CCs have different perks. For instance, Visa Signature has some warranty extensions, price protections, and cellphone protections. So when I buy certain items that have a one year warranty and the retailer asks if I want to extend it for a fee, I decline it because I’ll get another year through paying with my Visa Signature anyway.
(No affiliation with Visa; it’s just an example)
TBH I would say it depends on the person, the mindset, and the intent. If you go into it thinking that a credit card is just extra money that you have, that’s how you wind up with credit card debt. I’m a great example of that, I have relied heavily on credit cards for far too many years, so I cannot use my cards for all my expenses and pay in full each month, presently, so my course is to pay everything off and then I can get to a place where I’m paying cards in full every month. There are those who may not have the discipline to pay in full every month, and/or rack up large balances. If you can find a points related card and use it for your expenses, use the points to pay down the balance, you can save money that way.
I only use my debit card to get money out free ATMs. I keep it frozen until I withdraw, and then immediately refreeze it