Debit Card Loyalist Asks: Is a Credit Card Truly Superior for Purchases Over $20?

The debate over debit cards versus credit cards seems to be never-ending. Advocates of both sides love to get into the weeds about which one is the best choice if you want to avoid overspending. Alternatively, there is also a consideration of which card offers better consumer protections. 

Well, one Redditor posting in r/personalfinance is looking to keep this debit versus credit debate alive and well. With their post, they are asking the world if it makes sense to use a credit card for every purchase over $20. If you do use a credit card, they are also wondering how frequently it needs to be paid off. 

Using Debit Over Credit

This Redditor poses an interesting question about when, if ever, you’d use a debit card. They are wondering if you are better off using a debit card under $20 and then using credit for everything larger. As of the time of their posting, they have been using a Wells Fargo debit card to purchase everything, regardless of the amount. 

There is a pretty fair question on the Redditor’s end asking if it’s better to switch to credit. First, they are wondering if switching to credit cards will help them build up credit. Separately, they are also wondering if switching to credit is a smart move, so they can start accumulating frequent flyer miles. 

Another question is whether or not they will be charged to use a credit card for bills. While not common everywhere, there are instances where retailers or utilities will charge a small percentage for credit card payments. In other words, this is a perfectly fair question. 

Lastly, they already have a credit card from college with a $4,000 balance. Having paid it down to $8,000, they are also wondering if their first step should be to pay it off. 

Benefits Of Credit Cards

Overall, credit cards offer far more benefits and applications than debit cards. To the Redditor’s point, if they are serious about building up credit, they need to use their credit card more. Of course, they have to pay off the balance on their first card. 

Assuming the balance is paid off, using a credit card is more than just earning cash back or travel rewards. At the top of the list of reasons to have a credit card are features like fraud protection. It’s far easier to handle a situation in which someone uses your credit card than a debit card. With a debit card, the money is instantly gone from your account, which could prevent you from paying bills. 

Credit cards offer far more fraud protection and likely leave you with zero liability. In addition, credit cards also give you warranty protections, in case an item breaks, or in some cases, is stolen. For the most part, credit cards will double the length of any existing warranty. In other words, with an iPhone purchase, you get a one-year warranty from Apple and another from your credit card. 

You can also take advantage of additional benefits, such as auto rental coverage, no foreign transaction fees, concierge assistance, and cash-back and travel mile perks. 

As for the best time to pay off a credit card, the Redditor is overthinking this a bit. You certainly don’t need to pay off every purchase every day. The focus should be on paying off the entire balance every month, but you don’t need to make any other payments. 

When Should You Use Debit

If the Redditor is wondering when to use a debit card, the best case is when they need cash quickly. A debit card is undoubtedly a better way to withdraw money directly from a checking or savings account. A credit card might charge a fee for withdrawing cash, though not always. 

Separately, the Redditor isn’t wrong that it does make sense to use a debit card if you want to avoid a merchant fee. This is especially true with smaller businesses that want to avoid a 3% charge from the credit card company. 

Lastly, a debit card can help you keep your budget in check as you really can’t overspend. Unlike a credit card, with a debit card, once you’ve run out of money, you can’t spend any more. However, beyond these few reasons, it’s hard to imagine a scenario in which most people would be better off using a debit card over a credit card. 

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