When should you avoid using a debit card?

Category: Personal Finances

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For smaller purchases and everyday transactions, many people don’t put too much thought into whether they should use a debit card or a credit card. But since your debit card is linked to your bank account and may not offer the same level of protection as a credit card, there are certain instances in which you may want to avoid using it. Even if you’ve limited yourself to debit card use because you want to avoid getting into debt by using credit cards, the following are some exceptions that you may want to consider making:

Whenever a deposit required

If you’re renting a car, booking a hotel room, renting costly equipment, or reserving anything else expensive, you may need to put a credit card number on file. However, you may want to avoid putting a debit card number on file. While you’re renting the item, a hold is usually put on your card, and this deposit can be large. If it’s a temporary hold on one of your credit cards, it might not be a big deal—but if it freezes up some of your available money in your bank account, it can be problematic, especially if you need to withdraw that cash or you need that money to pay bills. Although these types of holds usually don’t last more than a few days, you may just be better off using a credit card.

Online shopping

Shopping online is relatively safe, especially if you’re ordering from a reputable retailer. However, data breaches and hacks do occur. If your credit card information is stolen after ordering something online, it’s better for it to be your credit card number, rather than your debit card number. If a thief uses your debit card number to make unauthorized purchases, that money withdraws from your bank account and you may never see it again. While your bank may be able to fix the situation, it’s not always a guarantee, and this can result in substantial financial loss. However, if a fraudulent charge is made on one of your credit cards, you can usually dispute it.

Very costly purchases

Credit cards offer a lot of perks, and one of those benefits is usually extended protection on expensive purchases. Instead of spending the extra money on an extended warranty, you can usually take comfort in knowing that you automatically receive an extended warranty just by using a qualified credit card (ask your lender for details, or check through your terms and conditions). Debit cards, on the other hand, won’t offer this level of protection.


When you pay for a bill at a restaurant, your credit card completely leaves your sight for a few minutes. It may not be long, but it’s long enough for your information to be stolen. Unfortunately, this does happen somewhat often; to protect yourself completely, you may want to consider only using cash when you’re at a restaurant. If you’d rather pay with a card, though, avoid using your debit card. Similarly with online shopping, it’s better to deal with fraudulent charges made on a credit card, rather than a debit card.



Tags: debit cards, financial loss, identity theft, online shopping, restaurants

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