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5 Expert Reasons to Ditch Your Debit Card

Your debit card may work a lot like a credit card, but there are a few important distinctions that can make a world of difference. We asked some top experts in personal finance why they choose credit over debit -- here are their top five reasons.

Extra consumer protections
It's fairly common knowledge that most credit cards these days give you options to protect against fraud, but that isn't the only consumer advantage to buying on credit.

"Some credit cards also have benefits such as extended warranties, purchase protection and rental car insurance," says Beverly Harzog, financial expert and author of "Confessions of a Credit Junkie." "It's important to read the fine print so you understand the rates and fees, but you also might discover a lot of benefits and perks you didn't know you had."

Growing your credit score
There are a few proven ways to improve your credit score, and buying on credit is one of them. Smart credit use can demonstrate that you're a worthwhile risk and help attract better rates from lenders.

"If you pay your bills as agreed and on time, that's usually the biggest factor in a score, and using less than 30 percent of your credit limit helps you," says Lee Gimpel, co-developer of financial education tool The Good Credit Game. "Conversely, if you don't pay your bill on time . . . you really hurt yourself with respect to your credit score."

So while it's true that you have to spend on credit to pump up your score, it's important to be careful. You'll see higher numbers in no time if you keep your balance below 30 percent of your limit and never miss a payment.

Easier budgeting
Financial planning can mean a lot to keep track of, but credit cards can help shoulder some of that burden. When every transaction you make shows up on your monthly statements, it can be easier to stay on top of where your money goes.

"Using credit cards for everyday purchases can be a great way to keep record of your spending, particularly for budgeting, cash flow management and tax preparation," says Miranda Reiter, founder of financial planning firm She & Money. "When consumers use one or two credit cards for everyday spending, it takes the guesswork out of where their money is going when it comes time to take inventory of their finances."

Rewards, rewards, rewards
Debit card rewards were fairly common as recently as 2010, but after a few years of shifting regulations you'd be hard-pressed to find one these days. Luckily, though, issuers are still turning out rewards credit cards that can help you get more bang out of just about every buck you spend.

It's important to choose the best credit cards for your personal circumstances, says Harzog.

"If you spend a lot of time in your car, focus on cards that offer excellent gas rebates," she suggests. "If you travel a lot, maybe an airline miles card would work for you. You want to match your lifestyle and expenses to the right card or you won't take advantage of the rewards. If you make a good match, you can actually profit from your cards."

Minimizing risk and playing it smart
There isn't any question that credit cards have their upside as personal finance tools, but it would be unwise not to address the potential dangers.

"Consumers need to be aware of the amount they are charging," says Gail Cunningham, National Foundation for Credit Counseling vice president of membership and public relations. "Ideally, a person would not charge more than they could pay in full when the bill arrives, [or else] the interest and annual fee associated with the card may override the reward benefits."

Ultimately, debit card spending is great training for smart credit use. If you just use your credit card like a debit card -- keeping track of how much you spend and never going beyond the amount you have on hand -- you might be a credit expert yourself in no time.

This article 5 Expert Reasons to Ditch Your Debit Card originally appeared on

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Read/Post Comments (12) | Recommend This Article (18)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 11, 2014, at 2:54 PM, normgarry wrote:

    I am offered no fewer than 10 new credit cards each week. Though my credit score is 810 middle, I feel it ridiculous to try and make me apply for more cards. I already have 10 and I don't use them much. It feels like the government is trying to hand out more debt. Just like before 2006.

  • Report this Comment On May 11, 2014, at 3:12 PM, uask4it wrote:

    is this a joke? you made no points here. the cost is so much higher for credit card use. my debit costs me nothing, except fees if I use an ATM not belonging to my bank. rewards? yeah right, they are not worth the trouble that comes with the interest and fees of a credit card. You can get rewards from almost anywhere today. Budgeting? I can do this with a debit card also. You're just blowing smoke for the credit card industry. That is what is wrong with our country today Everyone charging and living way beyond there means. The real estate market has taken a dive because of credit

  • Report this Comment On May 11, 2014, at 5:34 PM, Disgustedman wrote:

    I have a credit card with a 2K limit...and a debit card which it's tied to the Credit card. I'm covered from those $35 overdraft fees (But not the $5 transfer fee) but am way better off staying within a budget.

  • Report this Comment On May 11, 2014, at 5:39 PM, BeeboBlackerby wrote:

    I learned long ago the only talent an investment of financial professional has is deception.

    The extra consumer protections they list you already have, or don't need.

    Extended warranties and consumer protection are two of the biggest cons around, nobody who knows anything purchases an extended warranty and the law provides the only consumer protection available.

    Rental car insurance? My buddy invened a scam where he and a helper would rent the smallest U Haul trailer they could find.

    Then stage an auto accident involving the trailer.

    Because the trailer's came with full coverage insurance as part of the price of the rent.

    Rental car companies provide insurance coverage for the drivers renting their vehicles as standard, gosspel practice.

    You don't actually think someone would just let you drive off in their car you were borrowing without it being insured, do you?

    This Motley Fool bunch are hustlers.

    When you read an interesting article they write, then have the storyline subtly begin to include advertising for investment advice without even a break in the text, and over and over and over, it's not by coincidence.

    They get your attention with some article they create, and create an image of their being journalists reporting facts combined with honest advice.

    Then it changes to some BS about the next big stock investment that will soon take off and you had better not miss out like you have in the past with Warren Buffet and Google, etc.

    Any legitimate news perveyor, whether magazine publishers, to newspapers, to television and radio news producers, to Internet website operators, and on want to make certain their viewers don't hold them resonsible for the lies and outrageous cliams they read made to look and sound like it was news journalism.


    it reads, to keep the viewers from thinking what is claimed in the sales ads was actually honest reporting.

    But not this Motley Fool.

    This website must certainly be operated by people in the investment business, because they actually disguise their stock market tips as being the end of the story you were reading.

    I didn't even bother reading past the first reason to own a credit card over a debit card before I saw though it as lies and distortion, like insurance salesmen from two different insurance companies, both of whom have sold you a policy covering the same potential loss without pointing out the fine print.

    Which reads something like if any additional insurance coverage exists covering this same loss, and two claims made for the same loss, they are not going to pay the claim you filed with them.

    I had one of these hustlers con me like I never been conned before, convincing me to "trust him" because he was a good guy when I began investing part of my pay regularly in what I thought were Mutual Funds.

    I did this aggressively, staring late when I was thirty years of age.

    For five years I had $200 a week taken from my paychek to be invested with whomever US Army veteran from Vietnam, John Freymuth of Omaha, had chosen based on his expertise as a broker.

    When i lost my job, needed every dollar to survive, I dug up the papers I had to read the fine print and calculate what penalties I would encur for takiing that money out earlier than intended, before my retirement.

    I found that I didn't have an investment retirement account with him or his company at all.

    IT WAS A LIFE INSURANCE POLICY worth nothing at all.

    Single, with no dependents, with a mortgage on the home I alone occupy, why in the world would I ever feel a need for life insurance?

    And the premiums had to be $800 a month!

    Mr. Trust Me had pulled a fast one, big time.

    I even found my signature on the dotted line of that life insurance policy and can't imagine how it got there.

    Turned him into the insurance regulators in the state and they sent me his response to my charging him with fraud, saying, "when that policy was taken out, I needed to sell more life polcies to keep my job and regret this misunderstanding. I only wish Mr. ____ would have handled this differently (rather than reporting him to them).

    He had retired by then, and he was the Acting National Commander of the American Legion at the time.

    So despite his written confession, the good old boys from Nebraska regulating the insurance industry in the state added their own kick in the teeth stating they could not find any wrong doing and the matter was closed.

    Good old boys.

    Like Bernie Madoff, no doubt.

    And whomever are now the producers and editors at both Motley Fool and Yahoo.

    Yahoo disguises outlandish advertising claims then places them in the list of daily news stories offered on their Home Page.

    Motley Fool is one of them, so are credit card companies.

  • Report this Comment On May 11, 2014, at 5:48 PM, emailnodata wrote:

    I swear to god...many of your psoters are utter morons.

    Never, fricking EVER use a debit card. EVER.

    Are you insane? It's tied directly to your checking account. In a fraud situation, it's YOUR MONEY that is gone..and may take weeks to recover.

    Use the damned credit card, pay it off. in a fraud situation, the bank handles it...promptly.

    Seriously don't post if you're really dumb enough to equate debit and credit cards.....just don't.

  • Report this Comment On May 11, 2014, at 5:55 PM, Neumann81 wrote:

    No wonder this was published on a site called Because you'd have to be a real fool to head this kind of advice. This is beyond nonsense. It's almost outraging that anyone would claim this advice as helpful. It is clearly a paid for article by someone who will benefit financially. Shame on you You're obviously a contributor to the economic status of the United States as well as the global economy. People know better these days. Or they should at least.

  • Report this Comment On May 11, 2014, at 5:56 PM, BeeboBlackerby wrote:

    I had a judge cancel all my credit cards and debt obligation I owed the credit card companies back in 1998.

    Just like that, no more debt collectors, interest compounding credit card debt, and stress from having too many credit cards all which were maxed out but one.

    These same people who had convinced me that seeking bankruptcy protection would be a mistake, that debt reorganization was the better choice, were all selling a course of action which was best for them and the banks, but selling it as the best course of action for those in debt.

    A week after the judge signed the order, one of the same credit card companies who had just been told by the court the debt I owed no longer exists, nor are they allowed to attempt to collect on it and should they try, they would face the standard penalty of paying their former debtor three times what they tried to collect.

    There is just no way that debt restructuring is the better choice for the average consumer over filing bankruptcy, or at least was.

    George W Bush and the Republicans changed the bankruptcy laws after, offering less protection for the debtor seeking protection.

    But I never wanted another credit card and never even consider applying for one, no matter how many offers and what the lies these bankers and their legions of hustlers claim to be true.

    Had a bank charge me just under $700 and demand payment when I forgot to add a purchase I made with my debit card to my checking account ballance and it generated three overdrafts in one day totaling $9.17.

    My account, they claimed, but they refused to close it until they were satisfied with the daily fees and additionl overdraft charges generated built up to the dollar amount I mentioned.

    Bankers suck, period.

    And anyone who relies on doing business with them like stock iinvestors, insurance barons, and business executives end up being just like them.

  • Report this Comment On May 11, 2014, at 6:23 PM, Neumann81 wrote:

    emailnodata - do you think you aren't subject to fraud if you don't use a debit card. Continue using your credit for everything and enjoy being raped with finance rates. I'd much rather buy what I can afford and not have to pay extra just for buying it with a piece of plastic. In the end, what's the bigger potential loss? A few days of being inconvenienced with potential fraud or a constant debt that you never finish paying off? I'm not saying DONT EVER use a credit card. But don't sit here and tell anyone that their stupid for choosing debit over a credit card.

  • Report this Comment On May 11, 2014, at 6:46 PM, Neumann81 wrote:

    Beeboblackberry- you're an idiot who is terrible with money. Your story only shows that credit is better then debit when you're a deadbeat who makes purchased they can't afford. The country hit a major recession because of careless people like you. Obviously there's less fees to pay when you choose not to pay any of them. You are not a person to be siting examples of proper financial decisions.

  • Report this Comment On May 11, 2014, at 8:51 PM, emailnodata wrote:


    I've not paid a cent of interest in 15 years.

    And read carefully: it's not that fraud cannot happen, it's who takes the first hit.

    You seem to not get this: debit is tied directly to your checking account: when that money is taken by someone else, it is GONE...and if you then have checks or other automatic withdrawals set up, you could be in a world of hurt.

    Sure, you can get the issue settled: eventually.

    With a credit card, as long as you notify them in a tiemlyi manner, the bank handles all issues quickly. Why?? Because it's THEIR money. Each purchase you make with a CC is a "loan" from the bank. If you pay that loan off each month, you pay no interest.

    You don't seem like a fool, so think hard on this.

  • Report this Comment On May 11, 2014, at 9:00 PM, emailnodata wrote:

    In any event, even if you're dumb enough to use a debit card as your main tool, find a bank that:

    -compensates you for the fees from cash withdrawals (for instance, bank of the internet does)

    -will email you on each and every transaction, so that you know instantly if your account has been compromised

    If you're going to take the risk of using debit, at least try to be solid about it.

  • Report this Comment On May 12, 2014, at 2:44 AM, duudaa wrote:

    Replace "Expert" with "Banker" and the title will be accurate.

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