Debit or Credit? Which to Use and When?

December 15, 2016 1:41 pm

Sean M. Giles

Senior Financial Advisor

Debit or Credit? It’s a question we get almost every day, whether it be in person at the checkout or online and it’s a question you should take seriously. Why? My debit and credit card both have the Visa/MasterCard logo. What’s the big difference? There is actually a big difference, but for this article, I’m going to focus on security.

A while back a family member of mine made a purchase online with her debit card for a few hundred dollars. She’s been doing this for years and her reason is sensible in that she doesn’t want to use her credit card. This rationalization seems fair enough until the vendor she used online turned out to not be the most honest merchant. An unauthorized charge came out of her checking account and after a few weeks of disputes and phone calls, the bank finally reimbursed her. Now, suppose that amount was a larger purchase of $2,000 and that phony merchant charge went through.  Now you’re out $2,000 directly from your cash account. Oh, and your mortgage payment is due in two days. Now the question of debit or credit seems a little more important.

Credit cards offer consumers more rights and the ability to dispute charges without loss of funds or even halt them before they go through, leaving your checking or savings account untouched.  Remember, you can pay off your credit card balance as soon as it comes due. Also, with online banking you can transfer cash to it at any time. So, there is no excuse that you need to carry a balance if you are using your credit card more frequently than your debit.

Here are a few instances when you should avoid using your debit card:

Making big ticket purchases such as a TV, washing machine, etc.
Even if it’s from a reputable big box store you may get one that is damaged and have to dispute it.

I only use my credit card for purchasing on the web.

Pay at the pump
So many are targets of card skimmers.

Hotel and car reservations

Traveling both domestic and overseas
Although foreign ATMs usually give you the best exchange rate, for local currency you might want to consider using a debit card.

Any orders over the phone such as restaurant take out


There are others and there are always exceptions to consider, but I hope this gets you to think a bit more when you get the question debit or credit.

Sean Giles serves as Financial Advisor at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Sean’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.