Debit and Credit Cards: What to Know and When to Use Them

Maybe you’re wondering, do I need a credit card? Or maybe you want to know if there’s a strategy for when to use a credit vs. debit card. The answer to both questions is that it depends. A debit card and a credit card can play a strategic role in your financial strategy. The decision to apply for a credit card and the way you choose to use your debit and credit card will depend on your financial situation. We’ve put together a list of advantages and considerations for each.

The role of a debit card

Your INTRUST Visa® debit card provides you instant access to the money in your checking or spending account and is a convenient way to pay for your everyday needs. When you make purchases with your card, the money is immediately withdrawn from your account. Some people prefer to use a debit card because it’s easier than carrying cash and you can use it to pay for purchases (including small dollar amounts) as long as you have enough money in your account to cover the transactions and stay within the daily spending threshold. Some people also prefer to use a debit card in certain situations because it helps them avoid racking up credit card debt.

Advantages of a debit card

From accessibility to security to no annual fees or interest, your Visa debit card offers several benefits.

Instantly access your money

Visa is a widely accepted payment method around the world, and you can use your debit card to instantly access your money in several ways:

• Pay for purchases in stores and online.
• Use tap to pay if your card features the Contactless Symbol. You can also add your card to the mobile wallet on your smartphone or smartwatch so you can securely authorize payments without using your physical debit card.
• Use your card to withdraw money from an ATM.

More secure than using cash

Although there are times when you may need cash, your debit card can largely take the place of cash, so you don’t have to worry about misplacing your money. If you misplace your debit card, you can use Card Management within online and mobile banking to turn your card off so that no unauthorized transactions can be made. If you locate your card, you can switch it back on.

If your card is permanently lost, stolen, or you notice purchases that you don’t recognize, you should immediately report that to INTRUST Bank so we can help limit fraudulent activity. With Visa’s Zero Liability Policy, you are not responsible for unauthorized transactions² if you report the transactions as soon as possible.

No ATM fees at certain ATMs

As an INTRUST customer, when you use your debit card to withdraw cash from an INTRUST ATM or an ATM within our partnership network, you won’t pay an ATM fee. Learn how to find a surcharge-free ATM.

When you use a credit card to withdraw cash from an ATM, you’re taking a cash advance (more on that below). It’s generally a more expensive option.

No annual fee or interest

Your Visa debit card comes free with your checking or spending account and is free to use. You will not pay an annual fee. Some credit cards charge annual fees, and it’s important to know what that fee is and if the credit card you’re applying for is an affordable option for your budget.

Not connected to your credit report

Your checking or spending account activity is generally not reported to credit bureaus whereas your credit card account is. Making purchases with your debit card may allow you the flexibility to spend without the worry of increasing your credit card debt and using too much of your credit limit, which can affect your credit report.

Better to use when paying down debt

If you’re in the process of paying off credit card debt, you may want to consider using your debit card for purchases instead of your credit card. This can make the process of paying down your credit card debt feel more manageable.

Helps you potentially avoid getting too deep into debt

Since your debit card is connected to your checking or spending account and you’re spending your own money when you make purchases with it, you aren’t increasing your debt. Intentionally using your debit card to help keep your spending low on your credit card, and only charging your credit card for what you can afford to pay back each month, may help you avoid getting too deep into debt.

Debit card considerations

Although there are many advantages of using a debit card, it’s also important to consider the following factors.

Be aware of purchase holds

Some merchants, such as gas stations, hotels, and car rental companies, may request a temporary transaction hold on your debit card to ensure you have enough money in your account to cover the final cost of the transaction. The transaction hold is often more expensive than the final purchase price because the merchant is estimating the amount. Most holds will go away overnight, and your account will soon reflect the correct purchase price. However, some holds can last up to three days. Using your credit card can be a good idea if you’re concerned about a purchase hold on your debit card affecting the available balance in your checking or spending account.

No rewards

When you make purchases with your INTRUST Visa debit card, you don’t have the opportunity to earn rewards as you do with some credit cards. That can be a good thing if you’re looking to lower your overall spending on non-necessities such as purchases at retail stores, entertainment venues, and restaurants. When there isn’t an incentive to spend, it can help you spend less. That said, many people find credit card rewards valuable, especially the cash-back option. 

The role of a credit card

A credit card can be a convenient tool because it generally offers you extra time to pay for purchases you make, and you may earn rewards for making purchases. Unlike a debit card, however, which comes free with an INTRUST checking or spending account, you must apply for a credit card and be approved. This is where your credit report comes into play. Your credit report can affect:

• The type of credit card you can get.
• Your credit limit.
• Your annual percentage rate (APR).

We discuss some of these factors in more detail below, along with advantages and considerations.

Advantages of a credit card

When used effectively, a credit card can be a strategic way to pay for purchases as your monthly budget allows. It can offer you the flexibility to make a more expensive purchase that, if charged to your debit card, would immediately reduce the available balance of your checking or spending account.

Make a purchase and pay for it later

A credit card can be a way for you to make purchases now and pay for them when your credit card bill comes due. The extra time to pay for the purchases often allows you to fit them more comfortably into your monthly budget. Financial experts recommend that you pay your credit card bill in full by your due date each month. This generally helps you avoid paying interest on regular transactions¹ (more on that below).

Ability to earn rewards

When you use your credit card, you might be able to earn rewards on qualifying purchases. Many people find credit card rewards valuable, especially when earned on necessary purchases such as groceries and gas. Depending on your card, rewards could come as cash back, merchandise, gift cards, or airline miles. You can store your rewards until you want to redeem them or until they expire (often at five years). Watch your statement; it will tell you when your points expire. Redemption options vary by card, but here are a few ways you may be able to use your rewards to help you save money:

• Apply toward your monthly credit card bill.
• Make a deposit into your savings account.
• Apply at checkout on certain online sites.
• Apply toward travel reservations.
• Redeem for gift cards.

Convenient to use with merchants that request purchase holds

A credit card can come in handy when you’re, say, booking a hotel room or rental car. In fact, some companies may not let you make a reservation without a credit card. This has to do with temporary transaction holds (see the debit card considerations section above for more information). If you are allowed to book with a debit card, the company may instantly charge you for the full expense of the reservation. If you have not properly budgeted for that expense, it may be a burden on the available balance in your checking or spending account. It can be easier and more strategic to use a credit card in those situations.

Credit card considerations

There are several important factors to consider before you apply for a credit card, during the application process, and after you receive your card.

Understand your interest rate

Before you apply for a credit card, take note of the annual percentage rate (APR), or the interest rate you’re charged per year for carrying a balance on that card. Credit card companies typically set your APR based on your credit score. Generally, the higher your credit score, the lower your APR will be.

Even though it’s called annual percentage rate, credit card interest is calculated daily. If you pay your credit card balance in full each month by the time your payment is due, you will generally not pay interest on regular transactions¹. However, when you make an expensive purchase on your credit card, it can be harder to pay your balance in full by the time your payment is due. If you only pay a portion of your balance (such as the minimum payment amount), you still owe money. This is called carrying a balance. When you carry a balance on your card, you’re charged a daily percentage of your total APR.

It boils down to this: If you’re carrying a balance on your credit card, especially a high balance, the interest you’re paying can get expensive — meaning you’re paying more for your purchases than the original sticker price. That’s why it’s best to only charge what you can pay off each month, if possible.

Spending can lead to debt

When you have the convenience of a grace period, it can lead to a pattern of overspending. You may inadvertently rack up more debt than you can realistically pay off by your payment due date. Here are a few tips:

• If you cannot pay your balance in full, try to at least pay more than your minimum balance.
• Consider being intentional about when you use your credit card. If you’re using it for necessities like gas and groceries to earn points, you’ll want to make sure you can pay those purchases off in full each month. If you find you are unable to pay in full, using your debit card may be the better option so you don’t end up with a loan on groceries.
• Try using your credit card in combination with your debit card to keep your spending manageable.
• If you use your credit card to make a high-dollar purchase, create a plan to pay off the debt.

Can negatively impact your credit report

You should always make at least the minimum monthly payment on your credit card. The worst thing you can do is miss a payment. Missing a payment will cause a significant drop in your credit score, and a record of the past-due payment will stay on your credit report for up to seven years. It may affect your ability to get affordable rates on other loans (such as a car or home loan) in the future. It can even impact your ability to open a checking account or obtain employment, as some employers check your credit report as part of the hiring process.

Be cautious of cash advances

A cash advance is when you withdraw cash using your credit card. It’s generally a more expensive option than using your debit card for several reasons:

• There isn’t a grace period. Interest starts accumulating immediately on a cash advance transaction.
• You may pay a cash advance fee. A cash advance fee is the service charge that your credit card issuer may apply to cash advance transactions. The fee is sometimes taken directly out of your cash advance, or it may be applied to your credit card bill.
• You may pay an ATM fee. On top of the cash advance fee and the higher interest rate, if you’re using an ATM for the cash transaction, you may also pay an ATM fee.
• You may pay a higher interest rate. When it comes to cash advances, interest is typically higher than it is on regular purchases. Additionally, keep in mind that you’ll be paying interest on the total transaction cost: the cash advance plus the cash advance fee, the ATM fee, and other fees you may be charged as part of the transaction.

A debit card and a credit card can work together to provide you with flexible ways to pay that meet your current financial needs. Thinking about when and why you use your cards can help you use them more effectively. And remember, managing your finances is a balance between spending and saving. Learn how to create a saving strategy.

¹ Interest may accumulate immediately on cash, quasi cash, and ATM cash transactions.

² Visa’s Zero Liability Policy only applies to unauthorized transactions. If you authorize a payment for a good or service using your debit or credit card and don’t receive the good or service as promised, it isn’t covered by Zero Liability. Always do your best to make sure the good or service you’re purchasing is legitimate.