If you’re trying to avoid debt, using a debit card can be a smart compromise. You get the convenience and ease of using plastic rather than cash, but you don’t have to worry about building a balance or paying interest fees.
However, exclusively using a debit card isn’t always a good idea. It could leave you open to theft and fewer protections if things go wrong.
7 times you should never use a debit card
It’s important to know that you shouldn’t rely on a debit card for everything. In fact, using a debit card can sometimes be downright dangerous. Here are seven occasions when using a debit card just doesn’t make sense.
1. When you’re shopping online
Although online shopping has come a long way, it’s still not completely secure. Online retailers are subject to hackers, and your debit card information could be compromised. Since debit cards are linked to your bank account, a thief could wipe out your bank account. And, because debit cards have fewer protections than credit cards, you may not be able to recoup that money.
2. When you’re at the gas station
Unfortunately, gas stations are another common target for thieves. Card skimmers are frequently installed on machines. When you use your card, they can access your card information and spend your hard-earned money.
3. When you’re making a big-ticket purchase
When you’re buying an expensive item, such as a new appliance, it makes more sense to use a credit card. Many credit cards offer benefits like purchase protection and extended warranties, helping you in case anything goes wrong with your new item.
4. When you’re renting a car
Many car rental companies do not allow you to use a debit card, and will insist that you place a credit card on file. If you only have a debit card, that can make finding a rental car difficult.
Plus, many credit cards offer travel protections like free car rental insurance, helping you save money.
5. When you’re dining out
When you’re at a restaurant and receive your check, you typically hand the server your card to pay. The server then takes the card back to the register to complete the transaction. During that time, your card is out of sight and in the hands of strangers. That’s why dining out is a leading cause of card theft.
Using a credit card gives you more protection, as you can dispute any fraudulent charges and have the amount removed from your account.
6. When you’ve placed an order
If you’re making a purchase that requires an upfront payment but won’t be delivered until later — such as when you buy furniture — it’s a good idea to use a credit card rather than a debit card. If something goes wrong with your order, such as it getting delayed or going missing, you’ll be able to dispute the charges more easily.
7. When you’re staying at a hotel
Most hotels require you to use a credit card when you check-in. If you use a debit card, the hotel may place a hold on your account, potentially preventing you from using hundreds of dollars in your account.
Smart beginner credit cards
If you’re a debit card devotee considering a transition to credit cards, there are a number of beginner-friendly credit cards to consider, such as:
Secured Mastercard® from Capital One: This card is a secured card, so you don’t have to worry about running up a large balance. Make the minimum required security deposit and you'll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line.
Capital One Platinum Credit Card: If you have just fair credit, this card can help you build your credit history. There’s no annual fee, and you’re covered by $0 fraud liability if your card is lost or stolen.
- Chase Freedom Unlimited®: If you have good credit, the Chase Freedom Unlimited® card is an excellent step up from a debit card. It allows you to earn a $200 bonus after you spend $500 on purchases in your first 3 months from account opening. You can also earn 1.5% cash back on every purchase you make, with no limit to the cash back you can earn.
Applying for a credit card
While it’s smart to worry about building up credit card debt, solely using a debit card for every purchase can leave you vulnerable. Instead, use a credit card in certain circumstances to make sure you have protection against fraud or theft.
If you decide that a credit card is right for you, check out the best credit cards of 2019 to help you find the perfect option.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.