Credit Card vs Debit Card for Everyday Use

That was true when debit cards first came out, but the Federal Electronic Funds Transfer Act now limits consumer liability as follows:

True, though, it may still take several days (up to 10 by law) to straighten out a checking account if debit card fraud occurs and that can be a major PITB.

You’re much safer using your CC rather than your Debit card. If your CC gets compromised, all you need to do is call the CC company and they remove the charges. If your Debit card is compromised and your bank balance goes too low, the fraudulent charges may be the least of your concerns. You may not be able to use your Debit card until the bank corrects the charges. Automatic charges and other payments may bounce or go late, which may trigger penalties and higher interest on your accounts. You may have to contact many different companies and plead your case to see if they’ll agree to waive the penalties.

For example, say your CC automatically drafts from your checking account. If hackers drain your checking account, the CC charge could bounce and the CC company will assess fines and move you to a higher interest rate. It’s totally up to the discretion of the CC company to wave those penalties and will have nothing to do with the bank refunding the fraudulent charges.

If you pay off the CC every month, and don’t pay a yearly fee, then it’s CC all the way.

I put most everything – including my last new car* – on my credit card.

*Paid it off the next month and got a free hotel night out of the deal (in addition to the points I got).

I have several reasons for preferring a credit card.

  1. In case of a dispute, I hold the money on a credit card, they hold the money on debit card.

  2. Percent cash back with credit card, along with car rental waiver, trip interruption insurance, etc…

  3. Don’t have to juggle funds in order to make an occasional purchase exceeding the accessible balance in that particular bank.

Keep a bank card for ATM use only, never for purchases.

I pay the CC balance online from bank account, but I choose the date and make sure it is covered.