Choose Credit Over Debit

Americans’ usage of debit cards has risen dramatically in the past decade. Between 2000 and 2012, the number of debit card payments grew from 8.3 billion to 47 billion. This shouldn’t necessarily come as a surprise since it included the largest debt-fueled financial crisis in American history and many millennial’s who traditionally would have been opening credit card accounts during this period were already burdened with student loans. More recently, however, credit cards replaced debit cards as the ‘most preferred payment form’ according to TSYS’s 2016 US Consumer Payment Study.


  • Relying on debit cards rather than credit cards for everyday purchases can be costly and risky.
  • The most apparent cost of using a debit card instead of a credit card is lost rewards
  • Credit cards offer a higher level of security and liability coverage
  • Credit cards give you more power to dispute charges
  • Credit cards help build credit, which can significantly reduce the costs of other major purchases.



The most apparent cost of using a debit card instead of a credit card is lost rewards. Some of the most basic cash-back rewards cards will offer 1.5-2% back on all purchases made when using a credit card and travel rewards cards can sometimes be even more rewarding.

To put this in perspective using a simple example; assume you spend an average of $2,000 per month on expenses that could be paid with a credit card. At 2% cash-back, this amounts to $40 per month or $480 per year. Wouldn’t it be nice to have an extra $480 in your pocket for doing almost nothing different?

Obtaining these rewards assumes that you pay back all of your charges at the end of the billing cycle, of course. Therefore if you struggle to keep track of expenditures when you’re not seeing cash leave your wallet or funds immediately being withdrawn from your checking account, it may be best to stick with a debit card. However, if you are simply using a debit card out of habit or are operating under some false notion that paying with a credit card is inherently bad…you’re making a costly mistake.

To learn more about credit card rewards or to find out which card might be the best fit for your spending habits, I highly suggest you head over to and check out the TPG Maximizer.



Beyond losing out on potential rewards, credit cards offer a greater level of security and liability protection. Credit cards are covered under the Truth in Lending Act— a federal statute that limits consumer liability to no more than $50 whereas debit cards are covered under the Electronic Funds Transfer Act which limits your liability to different amounts based on when you report the card missing.

In my personal experience, credit card companies take your side when these unfortunate events occur and it feels great knowing that you have the support of a major company working to rectify fraudulent transactions. Alternatively, the banks that issue debit cards will assess claims on a case-by-case basis and there’s no law saying that they actually have to do anything.

Imagine a thief gets a hold of your debit card and wipes out your entire checking account. You’ll have no funds to pay bills and you may even be liable for any overdraft or late fees triggered by the theft.

You wouldn’t have to worry about any of this if a thief got a hold of your credit card instead. The thief would not have access to your checking account and it wouldn’t matter how many days passed before you noticed the fraudulent charges—you’d be completely covered regardless.



Credit cards are also great when making large purchases. For example, if something goes wrong with an item or service that you purchased, you can dispute this with the credit card company and the credit card company will work directly with the vendor or manufacturer to resolve the issue. If the issue is not resolved, the credit card company will cover the cost and you will not be liable for anything. Additionally, some credit cards will actually offer extended warranties, guaranteed returns, rental insurance and more.

If these purchases were made with a debit card, the money would have already been withdrawn from your account and you would not have the support of a major company backing up your claims.



Another critical reason to use a credit card is to improve your credit score. Building your credit score is far from a perfect system but successfully managing a revolving line of credit is a surefire way to boost your credit score regardless if you’re already paying back a car or student loan.

Debit cards don’t bolster your credit history at all.

A strong credit score matters. Whether you’re looking to buy a car, a home, open a cell phone plan, rent an apartment or sometimes even get a job—somebody will be checking your credit. Reducing the interest rate you’ll have to pay on a loan or mortgage by having a strong credit score can save you substantial amounts of money in the long haul.



There are plenty of compelling reasons to use a credit card instead of using a debit card. Whether it’s to save money using cash-back or when traveling, avoiding hassle when disputing a transaction or dealing with fraud, or to build your credit. If you are able to pay your credit card off in full every month, it might be a good idea to choose credit over debit.