I Haven't Used My Debit Card in Years. Here's Why

For the past decade or so, I've done the bulk of my banking online. The CDs I opened last year, for example, were all set up online. And the bulk of my bills get paid out of an online checking account that's linked to an online savings account.

But despite doing most of my banking online, I maintain an account at a physical bank in town for one reason -- access to cash. My online bank doesn't have a great network of ATMs, but my physical bank does. It's convenient to have that account when I need to withdraw money, or when I need an in-person service like a notary signature.

Meanwhile, I have a debit card associated with my physical checking account. But I don't think I've swiped that card in many years, and there's a big reason for that. However, I may soon start to use my debit card more often.

Why my debit card hasn't seen much action

Over roughly the past decade, I've pretty much only used my credit cards for in-store or online purchases, not my debit card. And the reason is simple.

With my credit cards, I get cash back or rewards for the things I buy. With my debit card, I get the convenience of not having to come up with physical cash, but that's about it.

So let's say I typically spend $5,000 a year on restaurants. With a debit card, I get $0 back. With a credit card giving me 3% back on restaurant purchases, I get $150 back.

And that's just in one spending category. So all told, using my credit card has been the smarter decision in recent years, for the most part. However, a change in the way a lot of stores and restaurants in my area have started doing business could prompt me to start using my debit card more often in the future.

When a debit card makes more sense

Over the past couple of years, there's been an uptick in restaurants and small businesses passing the cost of credit card processing fees onto their customers. Where I live, most restaurants, for example, now charge somewhere in the ballpark of 3% to use a credit card versus paying cash or swiping a debit card.

Now, constantly having to hit the ATM is a hassle, so I'd almost always rather just hand over a card. And since one of my credit cards gives me 3% back on dining purchases, even if I'm charged 3% to use my card, I break even.

However, some businesses I've come across charge a higher fee than that for using a credit card. So going forward, in situations like that, it will make sense for me to use my debit card instead. Although merchants are allowed to pass the cost of their processing fees on to consumers, it's generally not permissible to impose a surcharge on debit card purchases.

All told, there are lots of good reasons to use a credit card over a debit card. But if you're in a situation where using your credit card will cost you more, then you may want to look to swipe your debit card.

That said, if you're not used to paying by debit card (like me) and you intend to start using yours more often, it pays to review the balance on the checking account associated with that debit card every week. This is something I already do with my credit cards to track my spending, and it pays to do so with your debit card if you're going to be using it more frequently.