According to the Wall Street Journal (citing a Nillson Report), there has been a surge in debit card use even while credit card charges have declined. That doesn’t seem too surprising when you think about it; we’re in a bad economy right now, and people want to pay off their credit cards as quickly as possible. Running their balances up would be counter-productive. Debit cards, on the other hand, are as good as cash at most places.
But some debit card shoppers have raised good points. For one thing, you have greater purchase protection when you buy things with a credit card. Some banks don’t go to bat for debit card customers, so any money that exits your checking account might be gone for good.
Debit cards can also get you into trouble if you don’t track your transactions meticulously. For example, while most charges post immediately, others might take days. This can create the illusion that you have more money in the bank than you actually do. And overspending with a debit card can subject you to numerous $30-40 overdraft charges in a single day.
The bottom line: If you pay off your credit card balances each month, you can safely continue to use your cards to collect reward points and other perks. But if you have big credit card balances that you need to pay down, start choosing debit for your transactions.
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