Have you ever wondered which you should do—credit card vs debit card?
The moment I graduated and could apply for my first credit card, you bet I did. My dad was an avid miles collector and seeing him be able to upgrade flights and book for free was enough for me to realize the power behind a good credit card.
I was only 21 or 22 at the time and was making around $30K a year—ahh, the joys of graduating in a recession!
But, I wanted those miles.
We loved to travel and if there was a way I could shave off the cost of our plans whether it be flights or hotels, I was excited about that. I also knew myself well—I was not an over spender, if anything, I was a saver, so any worries of overspending beyond my means wasn’t a concern.
Because travel was my main reason for wanting a credit card, I settled on the Capital One Venture Card. I still have it today and absolutely love it. And no, this is in no way sponsored by Capital One, I just truly love the card—I’ve had it for 11 years now and have no plans of getting rid of it.
I’m currently racking up miles so when we finally get to go abroad again, I can use them to upgrade to Business Class. We did this on our last trip and guys—it ruined me, haha! That’s just one reason I like having a credit card vs debit card.
Credit Card vs Debit Card—Why I Like Credit Cards Better
Up Front Bonuses When You First Sign Up
Some credit cards will have a some sort of bonus for new cardmembers. I don’t remember exactly what mine was, but Capital One now offers 60,000 miles when you spend $3,000 in the first 3 months. If you’re using your credit card for as many expenses as you can, this shouldn’t be hard to reach. On top of that, I get double miles on every purchase.
Not every card has a bonus, so check on while you’re comparing.
Better Fraud Protection
It’s much easier to track fraud on your credit card than with a debit card. If it does happen, all you have to do is reach out to your credit card company, let them know about the fraud and they handle the rest.
If someone steals your debit card and racks up a lot of charges that money is gone instantly. It may take longer to recover it, and in the meantime, it’s not in your account.
Frequent Flyer Miles
If you’re looking for travel points, your options for different cards are endless. There are some cards that are specific to certain airlines—great if you travel for work and always book on the same airline. We don’t always fly on the same airline, which again, is why I love my Venture card. I’ve found that most credit card rewards come in two forms—travel points and cash back. Decide what’s best for you and go from there. I found this list that compares 15 of the best credit cards from October of 2021—take a peek!
If you’re not an avid traveler, there are cards that offer cash back for everyday expenses. I mean, who doesn’t want extra cash? You could use that cash to invest or save for retirement too. Some credit cards offer a flat rate, and others are on a sliding scale—more cash back for categories where you spend more (think groceries, dinners out, etc.). Check this list for some comparisons.
Build Credit Score
When you’re looking to build or improve your credit score, a responsibly used credit card can be a huge help. Credit card companies report your payments to credit bureaus which impact your credit score. Spending on a debit card is not recorded the same way, so it does not build or improve your credit score—womp womp.
Once you have a credit card, here are a few ways you can build and improve your credit score:
- Pay in Full and On Time—this one is huge, if you can’t do this, a credit card might not be right for you
- Hold onto your Card—the age of your oldest credit line shows lenders how much experience you have with handling credit, the longer, the better
- Don’t Open Many New Accounts—if you open too many new accounts, it’s a red flag. Stick with one card you know you can pay off.
- Don’t Spend too Much—stay well under your line of credit each month and that too can improve your credit score
Okay, almost everywhere! You’ll still find a few spots that are cash only, but it’s pretty rare these days. I love this for travel, it handles all the exchange information, and again, I know I’m safe from fraud while I’m abroad too.
When a Debit Card is Better
You Can’t Pay your Bill in Full or On Time
Thankfully, most companies will allow you to set up autopay which automatically drafts from your bank account on a set date. This ensures you’ll never miss a payment, which is good for your credit score. If you can’t pay in full, you will quickly amass interest charges. In this case, stick with a debit card that holds you responsible for your spending.
You Tend to Overspend
One tricky thing about credit cards is that you swipe and sometimes forget about what you’ve purchased. If you know that you tend to overspend and not pay attention to your spendings each month, then stick with a debit card. It will keep you from spending more than you have.
You can change these habits with practice overtime, but if you know that you’re an over-spender, stick with a debit card until you have better control over your spending.
Effortless Money Saving Tip
I don’t know about you guys, but I do a lot of my shopping online. Whether it’s for the kids, for myself, for my business—it’s just easy, so I utilize it often.
I recently added the Capital One Shopping App extension to Chrome. It’s totally free and prompts you to automatically try out a bunch of coupon codes it has found. I wish I had kept a running tally of how much it’s saved me, because it’s been a lot.
Just the other day I saved $228 on a big business order. It used a coupon code I would have never even known about! Little wins like this feel so good!
Tell me, do you prefer a credit card over a debit card? What rewards do you get with your card?