credit vs. Debit, Which Card Should You Use?

en espanol

Debit cards and credit cards look like similar products, and you can typically use them to do the same thing. But they have some crucial differences. Here’s a range of situations in which you might use either, along with the card that comes out on top.

Round 1: You’re carrying a credit card balance.

From a consumer perspective, the main point of a credit card is that you can borrow money to pay for something and not pay any fees or interest — if you pay off your balance before the deadline. But carry a balance past that date, and the interest rates are crazy high. (The current national average is around 16 percent.) So, if you have a credit card balance, do all you can not to let it grow; do that by using a debit card for any in-person and online purchases, so as not to dig yourself into a deeper hole. “The last thing you want to do is run your credit card balance up higher,” says Matt Schulz, chief credit analyst at LendingTree.

The winner: Debit

Round 2: You’re making a big purchase.

Paying with a credit card, whether in person or online, gives you an extra layer of consumer protection that debit cards do not. If the merchandise you purchased is defective or you never received it, and you can’t settle the problem with the merchant, you can appeal to the card issuer to intervene. Credit cards also are more likely to automatically extend warranties on purchases and protect them against loss or theft for a limited period of time.

From a cash-flow perspective, using a credit card will give you some time before you need to pay for that purchase, whereas debit cards will take the money out of your account immediately. “You could get at least 21 days before you have to pay for the purchase,” says Curtis Arnold, founder of

The winner: Credit

Round 3: You’re traveling overseas.

There are two things to focus on: currency conversion fees and transaction fees. Many credit and debit cards charge a 3 percent conversion fee; for every $100 converted, you get charged $3. Likewise, many banks charge a fee for each currency-exchange transaction, be it at an ATM or at a retailer. But not all: Debit cards from Capital One 360 ​​and Charles Schwab are among those that don’t charge a currency fee, though you may have to pay a local ATM fee. The message here: It’s less about credit card versus debit card, and more about cards that do or don’t charge these fees. “If you’re traveling, bring a main card and a backup card, and make sure neither of them charges foreign transaction fees,” says Sara Rathner, a credit card specialist at the personal finance website NerdWallet.

The winner: A draw

Round 4: You want rewards.

While some debit cards offer cash back—including Discover Cash Back Debit, Neon PointCard and Axos Debit Card—the rewards programs on credit cards tend to be far richer. “And with a credit card, you can pick the type of rewards that you want,” says Howard Dvorkin, chairman of—whether cash, travel points or discounts at a favorite retailer. Credit cards also often offer additional perks, including airport lounge access, shopping discounts and rental car insurance.

The winner: Credit

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