When To Use Your Debit Card Instead of Your Credit Card?

September 2022person shopping with a Waukesha State Bank debit card

Sometimes using your credit card makes sense, but there are many times when pulling out your debit card is ideal. Here’s a rundown of the most common situations in which you’ll want to grab your debit card when you reach for your wallet.

Avoiding merchant fees

You may assume that just because credit and debit cards look similar that they must function relatively identically. However, they’re far different behind the scenes — especially to retailers.

Some small businesses charge a fee to customers who use a credit card. Libby Kane and Jenny Cheng explain in an Insider article that this extra charge is because shopkeepers must pay to process credit card transactions — and not all businesses are big enough to absorb that cost without passing it on to the customer. If you want to avoid this fee, use cash or a debit card.

Fast access to cash when you aren’t near an ATM

Here’s a great benefit that paying for a purchase with a debit card will give you: the ability to immediately withdraw cash from your checking account.

When you pay for a purchase with a debit card, you often have the ability to receive money from the cashier right on the spot. “Many retailers offer the option to add a cash amount for withdrawal to your purchase at the point of sale when you use a debit card,” says Erica Lamberg in a CNBC article.

While some credit cards also allow you to do this, you’re going to be charged a fee for it. “When you use a credit card to withdraw cash, it’s considered a cash advance, and you’re immediately charged interest on the transaction,” explains Lamberg.

Manage your spending and avoid debt

Because the money you spend on debit card purchases comes directly from your checking account, you’re more likely to make frugal financial decisions and avoid impulse buys.

In his Investopedia article, Mark P. Cussen points out how the mindset that a shopper has when using a debit card linked directly to their personal funds will differ from the freedom a charge-now-pay-later credit card promises. “By using debit cards, impulsive spenders can avoid the temptation of credit and stick to their budget. This can help keep you out of high-interest debt.”

As you can see, debit cards have more benefits than you may realize. In addition to these mentioned, they typically don’t involve an annual fee, and because you’re using your own money, you’re not charged any interest like a credit card typically does.

If you don’t already have a debit card and would like one, visit with one of our friendly personal bankers at your local Waukesha State Bank office. They’d be happy to help you apply for one and answer any questions you may have.