When Should You Use Your Debit Card Instead of Your Credit Card

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Using a Mastercard® debit cardVisa Debit gives you 24/7 access to the funds in your checking account. Funds are deducted directly from your checking account which helps make keeping track of what you spend a snap.

What is a debit card?

A debit card is a card that deducts money from a designated checking account to pay for goods or services. It can be used anywhere Visa® or MasterCard® debit cards are accepted and no interest is charged. A debit card can also be used at ATMs to withdraw cash from accounts linked to that debit card.

  • Use your money when & where you want
  • Avoid monthly bills, recurring fees and interest payments with a debit card layer
  • Add your card to a digital wallet to make fast, secure payments from your mobile device


How Clark Howard Uses His Debit Card

Just in case you’re wondering, yes, Clark does use a debit card.

But he uses it only to withdraw cash from ATMs. He never uses his debit card for point-of-sale (POS) purchases at the register.

“If you’ve had trouble making sure you have more money than month, and if you know you have not been able to discipline yourself with spending, then nothing beats going cash only,” Clark says.

You can see more of what Clark has to say about debit cards in this video:

How is a debit card different from a credit card?

When you buy something with a credit card, you are borrowing money from the credit card company. The credit card company will send you a bill every month for the money you borrowed to buy things.

When you use a debit card, you are using money in your checking account to buy things.

For example, with debit cards:

  • You can get a debit card from the bank when you open a checking account
  • Money comes out of your checking account when you pay with a debit card
  • You don’t pay extra money in interest when you pay with a debit card
  • You can use a debit card at an ATM to get money from your checking account
  • You do not build a credit history using a debit card

With credit cards:

  • You apply for a credit card at a bank or store
  • You get a bill once a month for everything you buy with a credit card
  • You might pay extra money in interest if you don’t pay all of your credit card bill every month
  • You can use a credit card as a safer way to pay for things online
  • You can build a credit history using a credit card if you pay the whole bill every month when it is due

9. Hotels and holds

Some hotels will place holds on your card to cover any unexpected costs or expenses that don’t immediately show up on your itemized bill. There are sometimes holds or deposits in the hundreds of dollars to make sure you didn’t empty the minibar or trash the room.

A hold is almost unnoticeable if you’re using credit, but can be problematic if you’re using a debit card and have just enough in the account to cover what you need. It helps to ask about deposits and holds before you present your card, says Feddis.

Some gas station companies also will post holds on accounts. That means that even though you bought only $10 in gas, you could have a temporary bank hold for $50 to $100, says Tiffany, although that practice is not as common today as it was back when gas prices were high.

2. You can avoid merchant fees

Some small businesses, online retailers and restaurants will impose a surcharge when you use your credit card to make a purchase, but will exclude debit cards from such fees. 

"As much as I love credit card rewards, I wouldn't want to pay a 3% fee just to get 1% or 2% cash back," says Rossman. "If the debit card isn't charged a processing fee, it would be a better choice." 

Also, you may want to consider using a debit card rather than a credit card when making an international purchase if you have a credit card that charges foreign transaction fees. Before you travel abroad, double check to see which fee is lower.

4. Restaurants

The next time you’re dining out, stop and think about what could happen if you hand over your debit card when the check comes.

“For those few minutes that you let your debit card out of your sight, it could easily be run through an illegal handheld reader,” says Barry Bridges, a former writer and editor for The Simple Dollar and Bankrate. “Then the card is returned to you and you’re blissfully unaware that your information has been compromised.”

Of course, this identity-theft scenario is also possible with a credit card. The difference is that debit cards offer a lot less protection against unauthorized transactions than credit cards, mainly because the money is being taken directly out of your bank account.

Fortunately, some restaurants in the U.S. are following Europe’s lead and adopting tableside payment systems in which the wait staff brings the restaurant’s card reader to you. Until that technology comes to your favorite restaurant, pay with your credit card instead of your debit card. “You’re not eliminating the risk, but you’re using a payment method that makes it a lot easier to take corrective action against unauthorized charges,” Bridges says.

Can the bank find out who used my debit card?

If your card was fraudulently used, the bank may be able to find out who used it. It all depends on how the card was used and if any identifiers were left behind. For example, an ATM or retail store may have a security camera to capture the person's image. Or, if the card was used online, an IP or shipping address may help to find out who used it.

Do all credit cards charge interest?

While you may see 0% interest promotions, all credit cards eventually charge interest on balances that carry over from month to month. This interest rate is based on the annual percentage rate (APR). To avoid paying interest in the long term, pay your balance in full every month.

Use a Debit Card at an ATM

You can use debit cards to withdraw cash from your checking account at an automated teller machine (ATM). To do so, insert your card into the ATM's card reader. If you're not sure how the card goes in, look for a diagram that appears similar to your card. It should indicate which side goes up and which side should face left or right (look for something similar to the black stripe on the back of your card).

After the ATM reads your card, it will ask you to enter your personal identification number (PIN). Type in your PIN while blocking your hand from view (you don’t want anybody else to see what you type in at this point). Then, follow the instructions on the screen to make withdrawals, view your balance, or transfer money. If you had to insert your card into the machine and the machine keeps the card, contact the bank that owns the ATM as soon as you’re able to.

How do debit cards work?

When you open a checking account at a bank or credit union, you usually get a debit card. 

A debit card lets you spend money from your checking account without writing a check. 

  • You can use your debit card to buy things in a store
  • You can use it at an ATM to get cash

When you pay with a debit card, the money comes out of your checking account immediately.  There is no bill to pay later.

Pros of Using Debit Cards

Debit cards can have upsides and downsides, just like credit cards.

Avoid Debt

A debit card draws on money that the user already has, eliminating the danger of racking up debt. Retailers know people usually spend more when using plastic than if they were paying cash. By using debit cards, impulsive spenders can avoid the temptation of credit and stick to their budget. This can help keep you out of high-interest debt.

Fraud Protections

In addition, some debit cards—particularly those issued by payment processors, such as Visa or Mastercard—are starting to offer more of the protections enjoyed by credit card users.

The key is reporting fraud or theft as soon as you realize it has occurred. Your liability for fraudulent purchases is determined by the time frame in which it’s reported. Waiting too long to let the bank know that your card has been used for unauthorized purchases could result in you being held responsible for some or all losses.

No Annual Fee

Though many credit cards charge an annual fee, debit cards don’t. There’s also no fee for withdrawing cash using your debit card at your bank’s ATM. Credit cards, on the other hand, can charge a cash advance fee plus a steep interest rate for that convenience. However, you may pay other fees to maintain your checking account.

Cash advances from a credit card don’t have a grace period; instead, interest begins accruing right away.

How It Works 

With your Wells Fargo Debit Card, you can make purchases and payments, get cash, and manage your money at ATMs using your physical card or a digital wallet.

  • Access your accounts at ATMs

    You can get cash, transfer funds, make deposits, and more at approximately 12,000 Wells Fargo ATMs. Tap access: When you add your debit card to a digital wallet, you can use your mobile device to access Wells Fargo ATMs. With a contactless card you can access any Wells Fargo ATM by tapping your card near the EMVCo Contactless Symbol on the ATM, and entering your PIN. Digital wallet access is available at Wells Fargo ATMs for Wells Fargo Debit Cards in Wells Fargo-supported digital wallets.  At non-Wells Fargo ATMs that display the Visa® or Plus® symbol, you can withdraw cash and check balances from your primary linked checking and savings account. Cash at foreign ATMs is dispensed in the local currency and debited from your account in U.S. dollars. Fees are usually associated with each transaction (generally fees from Wells Fargo as well as the ATM’s bank). Most international ATMs do not permit transactions involving multiple accounts, so you generally can only access the primary account linked to your card.

  • Use your debit card for purchases Use your card to make everyday purchases at participating retailers and service providers – including online or by phone. You can pay bills same day on a one-time or recurring basis by providing your debit card information to your service provider. You also can arrange to make future purchases when you provide your debit card information to a service provider. The amount of the purchase will come out of your primary linked Wells Fargo checking account.
  • Add your debit card to a digital wallet Pay for products and services using your mobile device at participating retailers and service providers by adding your debit card to a digital wallet. Learn more about digital wallets.
  • Request a replacement card Sign on to request a replacement. Take the tour to see how.

Top FAQs

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