Using a Debit Card is a Mistake

There’s a reason some people refuse to get themselves a credit card. Credit cards tend to have a bad reputation. And a big reason is that so many Americans are saddled with credit card debt.

But as this Reddit user points out, credit cards themselves aren’t the problem. Rather, it’s people using credit cards incorrectly that tends to land them in financial trouble.

The poster insists that using debit cards over credit cards is a mistake. And he may be right. Here are some of the benefits of using credit cards over debit cards you should know about.

1. You can build credit

It’s true that having a lot of credit card debt can hurt your credit score. But if you pay off your credit cards when you’re supposed to and keep your balances low, they can actually help you build credit.

Your payment history carries more weight than any other factor in the course of calculating your credit score. If you pay your credit card bills on time every month, that helps build a strong payment history.

Another factor that goes into your credit score is credit usage. If you pay off your credit cards in full every month, your usage will be low, and your credit score could get a boost as a result.

The length of your credit history also goes into your credit score. If you keep a credit card account open for many years, your score could improve as long as that account remains in good standing.

Debit cards don’t help you build credit, though. That’s because your debit card isn’t tied to a line of credit. Instead, it’s tied to your bank account balance.

2. You get built-in protection

When you use a credit card to make a purchase, you get some protection that debit cards don’t offer. Say you buy a TV on a debit card and it stops working two weeks later. If the merchant refuses to make good on the warranty, you’re stuck.

With a credit card, you generally get protection in a situation like that. You could dispute the charge or have your credit card company intervene.

Beyond merchant disputes, credit cards offer superior protection against fraud under the Fair Credit Billing Act (FCBA), capping your liability for unauthorized charges at $50—though most issuers offer zero liability. In contrast, debit cards fall under the Electronic Fund Transfer Act (EFTA), where your liability can jump to $500 or even be unlimited if you fail to report the fraud quickly. Furthermore, while a debit card fraud investigation pends, your actual checking account is drained, potentially causing missed mortgage or utility payments.

3. You can earn financial rewards for making purchases

Most debit cards don’t give you cash back on purchases. But there are plenty of credit cards that do reward you financially for buying the things you need and want.

Say you normally spend $1,000 a month on groceries and gas for your car. With a debit card, you’re not getting a percentage of that back most of the time. With a credit card, you might get at least $10 back if your card has a 1% reward rate. And many credit cards offer bonus cash back in categories like gas and groceries, so you might get 4% or 5% back, depending on the card you use.

It is worth noting that a few modern exceptions exist, such as high-yield checking accounts or cash-back debit cards. However, even these options generally offer a flat 1% return, which pales in comparison to the 5% rotating categories or premium travel multipliers you can leverage with strategic credit card use.

Will $10 cash back change your life? Not really. But why not take a free $10 when you can get it?

4. You gain premium lifestyle and travel protections

Beyond cash back for daily expenses, credit cards often come with hidden fringe benefits that inherently make them more valuable. Many cards offer perks such as primary rental car insurance, trip cancellation coverage, extended warranties, and cell phone protection plans. These are benefits that debit cards almost never offer, representing massive financial value that goes far beyond a standard cash-back percentage.

Make sure to use your credit cards wisely

Clearly, there are many good reasons to favor credit cards over debit cards. But if you want to reap the benefits of credit cards, make sure not to fall into the trap of accruing interest on your balances.

To do this, keep tabs on your credit card spending during the month and pay off each bill by the time it’s due. If you pledge to never carry a balance and actually stick to that rule, you can enjoy all of the upside of credit cards without having them cost you money in interest or wreck your credit score by going overboard.

Finally, be mindful of the psychological spending gap. Studies consistently show that consumers spend significantly more when paying with plastic—especially credit—compared to cash, because the friction of spending is lower when you aren’t watching your immediate bank balance drop. Acknowledging this behavioral disconnect is crucial to ensuring your credit card remains a financial tool rather than a liability.

Editor’s note: This article was updated to clarify the distinct fraud liability differences between credit and debit cards under the Fair Credit Billing Act and the Electronic Fund Transfer Act. The update also notes cash-back debit card exceptions, highlights premium travel and lifestyle protections included with credit cards, and addresses the psychological spending gap associated with paying with plastic.