Please Put Away The Debit Card!

Please, oh please, I am begging you please – stop using your debit card. While your debit card may have been appropriate a few decades ago, it should not be seeing much daylight in 2016 and going forward.

Back when debit cards were cool...
Back when debit cards were cool!

Why? Well, your debit card.

#1 Offers little to no rewards (i.e. points, miles, cash back)

Do you like to earn cash back for each purchase you make? Or perhaps you like the idea of traveling the world for pennies on the dollar with rewards points and frequent flyer miles?

Hmm well your debit card gives you nothing of the sort…

#2 Offers limited fraud protection

When fraudulent charges occur on your credit card, your credit card company will drop the charges from your bill and investigate on your behalf. The process is really quite simple and painless.

Gotta love that credit card frog protection! Or is it fraud protection?
Gotta love that credit card frog protection! Or is it fraud protection?

The fraud protection offered by your bank (the issuer of your debit card) will probably not be as simple and painless. Once that fraudulent charge has been made, that money is out of your checking account. You may eventually be able to work with your bank to deposit the money back in your account, but in my experience that does not occur without some hassle!

#3 Offers you absolutely no benefit when it comes to building credit!

Remember how your credit works! Your utilization ratio plays a major role in your overall credit score and any increases in the credit available to you will improve that ever important ratio! Your debit card offers you no access to credit and therefore does not benefit your credit score whatsoever.

Credit Score Factors
“Amounts Owed” – Utilization is an key part of this factor!

Your credit just doesn’t “happen” – you have to build it through responsible use! And you cannot be responsible with credit is you have no credit available to you at all…

All these reasons to stash your debit cards forever… and yet, almost every day I see those dang darn debit cards being swiped and inserted (gotta love those new chip cards)!

So why are you using your debit card, rather than a credit card?

Specifically, a rewards credit card!?

Don’t spend money you don’t have.”

Bingo! I can hear my parents saying it now…

But remember, we are not spending money that we don’t have, since we should always be paying our credit card balances in full at the end of each statement!

To quote the AYP Starter Guide:

Pay your balances in FULL, EVERY month – This is very important. The points and miles that you earn will not be worth it if you carry a balance on your rewards credit card from month to month. Credit cards are notorious for charging lofty interest rates on credit card balances that are not paid in full each month, and these interest fees typically cost more than the worth of the miles you earned. Don’t change your spending habits in the name of points and miles! You can change the way you pay for things but don’t spend more than you would if you were using the wad of cash that used to fill your wallet.

So if you are not going to carry a balance, than credit cards are no different than debit cards, in which you can apply a much more accurate mantra:

“Don’t spend what you can’t afford”

Final Thought

Ugh… Debit Cards…

They offer little to no rewards (i.e. points, miles, cash back). They offer limited purchase protection/fraud protection (ATTENTION – I am begging you please – DO Not use a debit card at the gas station card swiper – you are asking to be skimmed). And worst of all they do nothing for your ever important credit score!

Toss the debit and hop on the credit card train!

Wise up people – Ditch the debit cards and be on your way to achieving your travel dreams via points and miles! And build your credit along the way!

Happy Travels!



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