When to Use a Debit Card—and When to Use a Credit Card Instead

That swipe (or tap these days) of plastic can be satisfying when you're making a purchase. But which type of plastic card should you use a debit card or a credit card? A 2022 survey by the Federal Reserve on consumer payment habits found that debit cards were "the most used and the most preferred"—44 percent of the participants said they preferred to pay with a debit card, while 32 percent chose a credit card.

But each method has its pros and cons, and knowing when you use each can help you make better choices with your money and earn rewards on purchases. While debit cards do offer protection against fraud and theft, they should be used with caution as they are directly linked to your bank account—keep your PIN safe by being aware of your surroundings at the ATM and try to use it minimally when you're traveling. Check your statements often and report suspicious activity to your bank right away.

"Debit card fraud protections depend heavily on how quickly you report the fraud, and a thief could empty your bank account before you even realize your information or card has been stolen," says Brooklyn Lowery, editorial director at credit card comparison site CardRatings.

While debit cards are very commonly used, there are many instances where using a credit card (responsibly) is beneficial. For one thing, you can't build credit with a debit card, and a good credit score is important for big-ticket purchases like buying a house or car.

Here are situations where you can use a debit card and when a credit card might be a better choice—so the next time you're asked "debit or credit?" you can make an informed decision.

Debit Card

Use a debit card if you're trying to control your spending.

You can use a debit card for everyday purchases—especially if you think that using a credit card all the time would lead you to overspend. "I️ suggest using debit cards for your everyday expenses except in high-risk situations," says Vanessa Perry, credit expert, and owner of Impeccable Credit Services.

It is much easier to track how much money is going in and out on a debit card—chances are, you know how much is in your account and how much you're allowed to spend. If you're not careful, a credit card can enable impulse buying because it gives you access to money you don't have. You can quickly fall into credit card debt and lose money on high-interest rates and late payment fees if you don't manage your spending properly. If you're more prone to mindlessly swiping your credit card online or in person, stick to using your debit card.

"Treat your debit card like cash," says Jamilah N. McCluney, financial advisor and strategist at Black Wealth Financial. "Do you have the money in your checking account readily available to cover your purchase? If so, swipe away."

You could also get a charge card, a type of credit card where you have to pay your statement in full every month—this is more similar to a debit card, and will help you stick to spending within your means while helping you build credit.

Use a debit card for withdrawing cash.

This one might seem obvious, but use your debit card to withdraw cash—again, make sure you're aware of your surroundings at the ATM or go to an ATM in a bank to ensure your information is safe. You can use a credit card to withdraw cash, but it requires a cash advance—"a kind of transaction that often comes with fees as well as a high-interest rate," says Lowery. You could also use your debit card at the grocery store and get cash back that way if you can't get to an ATM.

Credit Card

A credit card is safer to use for online shopping.

Use your credit card for online shopping so you don't have your debit card information all over the internet. "Chip-enabled cards are very good at deterring in-person fraud but that doesn't help you online, and that's where most of the fraud has gone," says Ted Rossman senior industry analyst at CreditCards.com. Check your browser and shopping apps to make sure your debit card isn't saved as the preferred payment method and add your credit card instead—or you can delete both to make it harder for you to overspend online.

Use a credit card for any recurring payments.

Any recurring payments you have such as subscription services that renew every month or year like Netflix, Amazon Prime, or Spotify are good to put on your credit card, especially an older one that you no longer use as much.

Recurring payments will keep that line of credit open so you can continue to maintain or increase your credit score—as long as you make payments on time. Make sure you check your credit card statements so you know which subscription services you're being charged for—you can waste a lot of money on subscriptions you no longer use or forgot you signed up for.

Use a credit card in case of an emergency.

Use your credit card when an unexpected expense comes up and you need some time before you can pay it off. "Be sure to repay more than the minimum on your credit card payments to avoid unnecessary interest," says McCluney. These can be emergency expenses while you're traveling, such as a flat tire, or other repairs and purchases.

It is OK to use a credit card for everyday purchases that you can pay off.

As long as you use it responsibly, charging everyday purchases to your credit card is perfectly fine—in fact, it can be the key to building credit and boosting your credit score. Stay within your credit limit (experts recommend using 30 percent or less each month) and always try to pay your statement off in full.

"I use my credit card for every possible purchase, whether it's a $1 pack of gum at the gas station or a major home improvement with a contractor," says Lowery. "The more I use my rewards cards, the bigger the bank of rewards I have to take my next vacation for free." Many credit cards offer points, travel miles, or cash back on everyday purchases like groceries or gas.

Rewards and all, it's still good to practice budgeting, spending within your means, and paying your bill every month. "Often times people get caught up with the points and travel miles," says Perry. "Although points do save money you have to always pay that amount back."

Bottom line: You can use both your debit and credit cards for everyday purchases depending on your personal preference, but stick to in-person transactions for your debit card to ensure safety. Having both and using each responsibly (and strategically) will help keep your financial life in good shape.