Why you should never use a debit card ever again

This is the equivalent of using a debit card

After I got my first credit card, I started saving money on my transactions because I got at least 1% cash back on each purchase. Once you get your first rewards credit card, in general, you should never use a debit card ever again.


By using a debit card, you are essentially throwing away free money! Why spend on a debit card and get 0% cash back when you can use a credit card and get at least 1% cash back? You’re still paying the same price to the merchant. Might as well stretch your dollar by an extra cent or two and save up for a nice vacation or to pay off some of your expenses.

Are there any exceptions?

Assuming you are eligible for a credit card, the only times you should use a debit card are when:

  1. The merchant only accepts debit cards, like WinCo
  2. When the merchant says they will charge you over 1% more to use a credit card over a debit card
  3. You are trying to withdraw cash from an ATM
  4. You’ve maxed out your credit cards and need to pay off your balance first

An important proviso: Using a credit card is only better than a debit card if you’re not carrying a balance. The rule here is to never spend more than you can afford. Carrying a balance is not only high interest (meaning you usually pay at least 25% to 30% more than you originally spent if you let the debt sit there for a year), it’s also highly detrimental to your credit score, and it takes many years to raise it to a healthy score.

What if I’ve maxed out my cards for the month?

Assuming you’ll pay off your balances, it’s still possible that your card might be maxed out for the month (i.e. you’ve reached the credit limit), and it won’t be usable again until the balance is paid off. If this is the case, you should still try to use another credit card you have (if you have any left), even if the earning rate is lower than your preferred card. For instance, if you hit your Chase Freedom Unlimited’s credit limit but you still have a Chase Freedom Flex to use, there’s no reason to give up and say “oh man, I won’t be getting 1.5% cash back anymore, I should just use a debit card”. No! Go use your Freedom Flex. You might not be getting 1.5% but you’ll still get 1% back. It’s not ideal, but you shouldn’t go back to using a debit card unless it is a last resort. (Also, try to avoid this by paying off your balances as soon as possible, multiple times a month.)

This is also a sign that you should apply for more no annual fee rewards credit cards.

Which credit cards should I apply for then?

Today, there are few credit cards that do not offer at least 1% cash back or 1x points on all purchases. If a credit card doesn’t have cash back, don’t apply for it. This goes for secured credit cards too; see why in the below section.

Keep in mind that not all cash back is created equal. For instance, many Capital One cards claim to offer 1x or 2x points on purchases, but in reality, the points are only worth ½ a cent when applied against your statement balance, so really you’re only getting 0.5% or 1% cash back. Programs like Chase Ultimate Rewards are much better in this regards (in Chase’s case, each point is always worth at least 1¢).

For my list of recommended cards, see My most useful credit cards.

What if I have bad or no credit?

If you need a secured credit card, then you can get one with cash back, like Quicksilver Secured or Discover Secured.

Even if you don’t yet have a credit history, there is still no excuse to use a debit card because you are most likely eligible for a student credit card. While they aren’t as glamorous as other credit cards and they don’t offer as nice of rewards, they are a stepping stone that still offer decent rewards. I’d recommend applying for either the Chase Freedom Student or the Discover it® Student Credit Card. Learn about how I got my first credit card, a Discover it® Student Credit Card, on this post: How I got my credit score above 800 before I turned 22 (Part 1).

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