5 Situations Where Using Your Debit Card is Essential, Experts Say
Many people talk about the benefits of credit card rewards, but not many take advantage of the perks that come with their debit cards. Debit cards, which are usually given for free when you open a checking account at your bank or credit union, offer many of the same benefits as credit cards. Plus, they take money directly from your account, helping you stick to your budget.
While credit cards have their place, you shouldn’t completely ignore your debit card. There are certain purchases where using a debit card is better, especially if you have trouble controlling your spending.
Experts from around the world shared their insights on when it’s better to use a debit card instead of a credit card. Here are five types of payments they recommend making with your debit card.
**For Gas and Groceries**
Most experts agree that debit cards are great for everyday purchases like gas and groceries. Using your debit card for these expenses can help you stay within your budget and avoid overspending. Since debit cards are linked directly to your checking account, the funds are immediately withdrawn when you make a purchase, helping you keep track of your spending and avoid debt. Some debit cards even offer cashback or rewards for purchases like gas or groceries.
**For Debt Payments**
Debt payments should be made with a debit card, especially for high-interest loans. Using a debit card for loan repayments ensures you are not creating more debt while paying off existing debt. If you use a credit card with a higher interest rate than your loan, you end up paying more in the long run.
**To Get Cash**
Credit card debt can be easy to accumulate and hard to pay off, so it’s best to avoid using credit cards unless you can pay them off each month. Withdrawing cash using a credit card is particularly risky because it comes with high fees and interest rates. Instead, use your debit card to withdraw cash directly from your checking account to avoid these extra costs.
**When Fees Are Higher**
Using a debit card can save you from high interest rates associated with credit cards. If you don’t pay off your credit card balance, the company charges you interest, which can be as high as 25%. Debit cards, on the other hand, don’t have this issue since the money comes directly from your bank account. Additionally, merchants, especially small businesses and overseas companies, may charge extra fees for credit card transactions. Debit cards can help you avoid these additional costs.
**For Minor Purchases**
Using your debit card for small purchases, like a cup of coffee or a snack, can help you meet the minimum number of transactions required to keep your checking account free or to earn interest on your balance. So, next time you’re buying a coffee or a small item from a local vendor, consider using your debit card instead of your credit card to take advantage of these benefits.