I was stunned that nine out of 10 readers who chatted with me on the BargainBabe.com Facebook page about how many credit cards they had in their wallet HAD NONE! Those nine readers only carry debit cards.
Confession: I have never used a debit card, ever.
I am scared of debit cards! Why do you use debit?
Part of me knows debit cards are secure. I mean, millions of people use debit cards every day. But that fact that a debit card directly removes cash from my account scares me.
- If my debit card got into the wrong hands, what protection do I have if hundreds or thousands of dollars was taken from my account? With a credit card, I’d be protected, especially because I’ve had my cards for years and have built a strong relationship from always paying my balance in full, on time, every month. (Yay, me!)
- A debit card does not build credit history, so I’m not advancing my financial prospects in the long run, not to mention the rewards I earn with my credit card.
- If I debited more money than I had in my bank account, I would either be rejected for a purchase or it would trigger overdraft fees (usually about $35) that I don’t want to pay. Note, it is now easier to opt OUT of overdraft programs, meaning the merchant would simply decline your purchase.
On the other hand, I can think of a few reasons why people use a debit card instead of a credit card (and especially why people avoid store credit cards).
- You got into trouble with credit cards, spending more than you could pay off.
- You opened too many credit cards at once.
- You filed for bankruptcy and so can’t find a bank to give you a credit card with decent interest rates and terms.
- You don’t trust yourself with credit because of the experience of someone close to you or because of horror stories about debt.
Why do you use a debit card? Should I get one?
PS. I looked at reader Joanne’s credit card bill (not her real name) and found ways she could save hundreds of dollars each month. Email me your bill (REDACT ALL SENSITIVE INFO FIRST) at julia at bargainbabe dot com for free advice.