4 Reasons I Only Use My Debit Card a Few Times a Year

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield

KEY POINTS

  • Debit cards and credit cards are useful financial tools that make it easier to pay for the things you buy.
  • However, debit cards and credit cards don't have the same features or protections.
  • Paying for everyday purchases with a credit card can be beneficial if you hope to build credit and want access to better fraud protection.

You may want to get into the habit of using your credit card more frequently.

Like many people, I carry a debit card in my wallet. While my debit card provides a convenient way to pay for purchases, I prefer using credit cards for most purchases due to their many benefits. Keep reading to find out why I use my debit card only a few times a year.

1. You can earn rewards on credit card spending

Most debit cards don't offer rewards. If they do, they're typically minimal. On the other hand, most rewards credit cards provide attractive rewards rates. Whether I'm earning cash back or points I can redeem for free hotel stays and flights, these rewards are valuable. Since I'm prioritizing earning more credit card rewards, I use my debit card minimally.

2. You get better fraud protection with credit cards

Whether you use debit or credit cards, fraud can and does happen. If you want to protect yourself more effectively, using a credit card is a good idea. Fraud protection isn't the same for credit cards and debit cards.

Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards

The Fair Credit Billing Act (FCBA) grants consumers the right to dispute unauthorized credit card charges. The FCBA states that consumers have a maximum liability of $50 for unauthorized credit card transactions. If you report your card as lost or stolen before fraud occurs, your liability is $0. Additionally, most of the best credit cards offer $0 fraud liability.

Regulations are different when it comes to unauthorized bank account charges. Unless debit card fraud is reported quickly, you may be liable for purchases you didn't make. Your maximum liability depends on how quickly you report your debit card as lost or stolen. It pays to act fast.

The Electronic Funds Transfer Act (EFTA) outlines rules regarding consumer liability for unauthorized bank charges. Here's an explanation:

  • You're not liable for any unauthorized charges if you report your debit card as lost or stolen before a fraudulent charge occurs.
  • If you report your debit card as lost or stolen within two business days of an unauthorized charge, your maximum liability is $50.
  • If you report your debit card as lost or stolen within 60 days of an unauthorized charge, but after two days, you're liable for up to $500.
  • You're fully responsible for the charges if you report your debit card as lost or stolen beyond 60 days from when the unauthorized charge occurred.

As you can see, using a credit card has advantages and could help you save money and hassle if you fall victim to fraud.

3. You can build credit by using credit cards

Your credit score gives creditors a look at your financial health. By having a good credit score, you may be able to take advantage of better opportunities, like getting approved for a loan with a lower interest rate. But it takes work to build your credit and increase your credit score.

One way to build your credit is using credit cards for everyday purchases. Good habits like paying your credit card bills on time every month can help you increase your credit score.

Using your debit card won't improve your credit. That's because you're using the money in your bank account to pay for purchases instead of using money that was lent to you and showing that you can pay back your debts. Don't miss out on this perk of credit cards if you want to build your credit.

4. You miss out on other valuable perks

Some credit cards include benefits like purchase protection, extended warranty protection, and travel benefits like trip delay and trip cancellation insurance. You won't find these perks included with a standard debit card. If you want access to valuable perks like these, you may want to start using a credit card for your everyday spending needs.

Your debit card allows you to use the money in your checking account to cover a purchase. But using a debit card for every purchase may not be the right move. Instead, consider using credit cards for the majority of your purchases. This can be a great choice if you pay your entire credit card balance in full and don't take on expensive credit card debt.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

Two of our top online savings account picks:

Rates as of Apr 15, 2024 Ratings Methodology
Advertisement
SoFi Checking and Savings Western Alliance Bank High-Yield Savings Premier
Member FDIC. Member FDIC.
Rating image, 4.75 out of 5 stars.
4.75/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: up to 4.60%

APY: 5.36%

Min. to earn APY: $0

Min. to earn APY: $0.01

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow