Why I've Stopped Using My Debit Card

For me, the protection that comes with using a credit card outweighs the convenience of a debit card.

Back when I was on Facebook, I remember a "friend" fretting because there was a large hold on her debit card. She'd stopped to fill her car with gas, assuming that the amount she spent was all that would be withdrawn from her checking account. What she didn't realize was that banks and credit card issuers have a legal right to put a hold on both debit and credit cards and that's what her bank had done. Unfortunately, that hold prevented her from making other purchases she needed to make that day.

Not using my debit card is a smart move

That Facebook post was made years ago, but I've always wondered how holds impact the millions of Americans living paycheck to paycheck. There's something about it that feels patently unfair. As of 2022, Visa and MasterCard have both raised the amount gas stations can hold from $125 to $175. This includes both credit and debit cards.

I'm grateful for that old post because it spurred me to think about all the reasons I really should use my debit card less. While it took months to wean off it, it's one of the smarter financial decisions I've made.

I don't like leaving too much money in my checking account. I don't cut it to the bone, but I also don't want money just sitting there, earning 0%. If I use my debit card to pay for gasoline, that means I have to leave an extra $175 in the account just for gas purchases. That feels silly. Because I pay my credit card off in full each month, I typically have "spare" money available on my credit card and a two or three-day hold won't make a difference.

Better protection

The protection offered while using a debit card is different than the protection afforded when using a credit card. Here's how:

Debit cards

Under the Electronic Funds Transfer Act (EFTA), the following protections are in place when we use our debit cards:

• If the card is lost or stolen but we report it before the crook has time to make any fraudulent purchases, we face no liability (and won't lose any money).
• If we report a lost or stolen card within 48 hours of the time someone else uses it, the amount of money we're liable for is limited to $50.
• If we make a report after 48 hours but within 60 days, liability is limited to $500.
• If the loss falls through the cracks and is not reported within 60 days, we're responsible for any money spent on the debit card. And if the account has been drained, we also have to pay any overdraft fees.

Credit cards

According to the Fair Credit Billing Act (FCBA), the most we're liable for if our credit card is stolen is $50. That's it. Even if the thief buys out a comic book store using our stolen card, all we're out is $50. Even better, if the physical card is not stolen but someone uses our credit card  number to make purchases, we're not responsible for any of it.

We're also covered if the following happens:

• We order something for delivery that doesn't arrive.
• Something we purchased was not as described or was faulty.
• We're overcharged for a product.

Just last week, I realized that I'd never been sent a popcorn maker I'd ordered. While it's not life-altering stuff, I did not appreciate paying for something that never came. I called my credit card company and they reversed the charge. No fuss, no muss.

Rewards

We love airline miles. In fact, my husband and I currently have enough to fly around the country several times and possibly run away to a tropical island -- all because we use a rewards card to make purchases.

I realize that some debit cards offer rewards, but I've never come across one that can compete with our credit cards.

Builds credit

It doesn't matter how old you are; a strong credit score is important. By using our credit card, we're building credit each month -- a feat that is not achieved when paying by debit card. 

A final note

I write this knowing that credit cards are not for everyone. If you're someone who's gotten into credit card debt and are afraid it might happen again, by all means, adopt an all-cash budget. If your partner is not great about handling credit, wait until there's an improvement on that front. The point is, what works for one person may be wrong for another. 

Letting go of my debit card was the right choice for me. It's possible that I'll one day change my mind. Until then, though, I'm racking up rewards and enjoying a higher level of fraud protection.