Credit Card or Debit Card: Which Should You Avoid?

By Zach Buchenau

Last Updated: December 30, 2019

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If you have more than one piece of plastic in your wallet, I can almost guarantee you have asked yourself the question, “Credit card or debit card?”

How did you make the decision? Did you choose a credit card for points and cash back, or did you go with your debit card, because you like the phrase “paid-in-full”?

In the moment, it probably didn’t feel like a huge deal. But what if I told you that, hanging in the balance of this seemingly small choice, was your entire financial future?

Would that sway your decision?

As you might suspect, I have a strong opinion on the matter. So, I’m not going to sit here and spit-up a generic post about the differences between credit cards and debit cards. I’m not going to provide definitions, and explain the pros and cons for each of them. I titled this post ‘Credit Card Or Debit Card: Which Should You Avoid?’ for a reason. So, let’s get to it.

Credit card or debit card? Which should you avoid? #debtfree #debitcard #budgeting #frugalliving

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Credit Cards

I believe credit cards are an over-complication of a very simple process.

Using a credit card is like saying, “I want to buy this, but I can’t afford it. So, I am going to have someone else pay you, and I will pay them back later for more money than it will cost me to just buy it today. Unless, of course, I completely pay them back within the next 30 days. Then, I will only have to pay them the same amount that I could just pay you today. Isn’t that brilliant?!?!”

You know what’s a lot easier? “Hi, I want to buy this. Here’s the money.”

The other problem with credit cards, is that when you use one to buy something, the transaction often doesn’t post to your account for a couple days. So, if you are using a credit card for a bunch of purchases, it is easy to lose track of your balance and be fooled into thinking you have more money available than you actually do.

Multiply that by a few different credit cards, and what do you get? A complete financial mess. I would know. I learned it the hard way.

Now, I know what you might be thinking after reading this: “Yeah, but you aren’t considering the points, miles and cash back that you get on a credit card.”

Let me put it this way, why do you think credit card companies offer incentives? It’s because they know that, given enough time, the majority of people are going to end up paying a massive amount of interest on purchases they let slide past that 30 day mark.

Personally, I would rather just pay $250 for a plane ticket than spend $600 on interest so that I can get one for ‘free’ with my reward miles.

Debit Cards

The debit card, however, is the epitome of simple. Just swipe or insert your card, enter your pin, and then walk away — transaction over. The purchase immediately shows up on your bank account, subtracts the money from your available balance, and shows your exact amount of remaining money in big, bold numbers.

It’s the combination of all the best parts of paying by cash, check, and credit card, without any of the hassle — or debt. There’s no need to carry around spare change. You don’t have to balance a checkbook. And most importantly, you don’t have to pay anybody back with interest.

The only catch is, you have to have enough money in your bank account for the process to work. I know, weird concept.

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When Will You Pay?

I had an elementary school teacher that used to say, “you can either play now, and pay later, or pay now, and play later.” At the time, I thought she was just talking about my homework, but maybe she was actually giving me some ‘wax-on, wax-off’ kind of financial training.

Whether you choose a debit card or credit card, you have to pay either way; you just have to decide when.

With a debit card, payment comes before you make a purchase. And I’m not referring to money here. I’m talking about the work and effort you put into saving enough to pay in full.

While watching the people around you swipe their credit cards, you have to patiently wait and save so that you can enjoy the purchase without the stress of debt and interest.

With a credit card, you get instant fun. You get the thrill of the purchase, without any pre-planning or effort. If you want it, just throw it on the credit card.

The crazy thing is, as your credit card payments start to add up, you become less and less able to pay with a debit card, because all your money is tied up in debt. So, when a surprise expense comes up, what do you do? You, once again, put it on the credit card, and add it to the pile. You find yourself worrying about things like cash-flow and collections. And, after all is said and done, that long-forgotten moment of instant fun has transformed into a vicious cycle of debt.

So, to rephrase what my teacher told me, “You can either pay now and play later, or play now and pay a lot more later.”

So, Credit Card or Debit Card?

Silver scale with question marks for the question, Credit card or debit card.

I consider myself a pretty straight-shooter. So, I’m just going to come right out with it: I don’t like credit cards, and I highly suggest you avoid them. Even better, you should shred every credit card you own. There, I said it. Whew, that feels good!

To be honest though, this hasn’t always been my mindset. In fact, I used to use credit cards almost exclusively. And, I was dumb enough to think I could beat them at their own game. I was a reward-points-hog, mile-seeker, and cash back king! But you know where it led? Debt.

Credit cards were my “Yellow Brick Road” to debt city, and I was the scarecrow.

Spending money on credit cards is a slippery slope. Like me, you can go for a long time without paying a penny of interest, and basking in the glory of your reward points. But make one mistake, and it is easy to fall into a vicious cycle of debt. And when that day comes, you are going to look longingly at your debit card and think, “Why didn’t I just pick you instead.”

Zach Buchenau

About The Author:

Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.

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