Credit Cards vs. Debit Cards: When You Should Use Each of Them

  • by Johns Hopkins FCU
  • 5/6/22
close up of a laptop and desk with a persons hands typing in a credit card number

There are several perks to using credit cards vs. debit cards. So when should you use debit, and when should you reach for credit? Keep reading to find out more! 

The Difference Between Credit and Debit

Here are the key differences when it comes to debit vs. credit cards.

Debit Cards 

Your debit card is linked to your bank account and allows you to access and spend only the amount of cash that you have available in your checking account at any given time. 

Whenever you need cash, you can easily use your debit card to withdraw cash from your Savings and Checking Account via an ATM. JHFCU has 20 of our own ATMs conveniently located on campus, plus you can use 30,000 ATMs in our nationwide network free of charge. You can also withdraw cash at your preferred branch.

It's important to keep an eye on your purchases and cash withdrawals so you don't use more than your account balance and overdraw your checking account. 

Credit Cards 

Your credit card gives you access to a revolving line of credit that you can borrow from and then pay back with interest over time. It's a great way to boost your purchasing power. Plus, if you can pay off your credit card balance before the due date on your account statement, you can generally avoid paying interest.

If necessary, you can use your credit card to withdraw cash. But you may need to pay a cash advance fee and you will need to pay interest on the amount you withdraw.

Using Credit Cards vs. Debit Cards

Both credit and debit cards allow you to use your card to pay for various expenses online or in person, including everything from groceries and gas to plane tickets and monthly bills. However, debit and credit cards each have their pros and cons and best use case scenarios. 

When to Use a Debit Card

When you need cash – When you need fast access to cash, your debit card gives you immediate access to the funds you already have. While you might be able to use a credit card to withdraw funds via a cash advance, it often comes with hefty fees. If you need to withdraw money from your checking account, using your debit card is the clear winner.

When you want to earn Ca$hPerks – Get a JHFCU Visa Debit Card and enroll in online banking and you'll automatically earn cash back on select purchases! Just go to the Offers section in our mobile app and use your debit card to make a purchase at your chosen retailer.  

To avoid fees – Some merchants and vendors will charge fees for transactions involving a credit card. Small businesses often must pay extra to process credit card transactions and so will pass these costs onto the consumer. Typically, these businesses can accept your debit card without any unexpected charges for you, or them. 

If you struggle with debt – Consumers who struggle to pay off the balance of their credit card each month should probably avoid making credit card usage a regular thing. Racking up credit card debt can be an extremely easy mistake to make – and a very costly one. So stick with your debit card whenever you feel that you cannot trust yourself enough with using credit.

For daily expenses – In most cases, you will benefit most from using your checking account and debit card for your everyday bills and expenses. Using a debit card is a more financially savvy way to keep track of your spending and your expenses, especially when you are on a tight budget or living paycheck to paycheck.

To pay your rent or mortgage - You should stick with using your debit card and checking account to pay your housing expenses whenever possible. Some landlords may accept credit card payments for rent, but it's not a great idea unless you can pay off the balance right away.

When to Use a Credit Card

When you need extra consumer protection – Credit cards offer better protection for various consumer expenses and transactions, including online shopping and travel. With a credit card, you can stop payment or even request a refund if you are unsatisfied with a purchase or a service or if your credit card has been stolen. 

Some cards even offer extended warranties on large purchases like electronics or appliances. Other cards offer price protection which will reimburse you for the difference if a product you buy goes on sale after your purchase. Check with your bank for a list of perks and protections that come with your card

When you are traveling – Not only do most hotels and car rental agencies require a credit card to be held on file or for a deposit, but you can also benefit from extra travel protections. Credit cards offer better coverage on everything from rental car damage to canceled flights.

When you want to build your credit score – If you can be financially responsible enough to pay off your credit card balance in full each month, regular credit card usage can be a quick and easy way to bring up your credit score. Try to never go above more than 30% of your available credit to keep your score as high as it can be.

To earn rewards, cash back, or points – Many consumers enjoy signing up for various rewards credit cards or cards that offer cash back programs. Shifting your regular spending onto your credit card can earn you a few hundred dollars in cash back or a free flight with your credit card miles in no time. Just be sure to pay off your balance ASAP each month.

Choosing The Right Credit Card Or Debit Card For You

Now that you know when it’s best to use a credit card vs. debit, it’s time to make sure you are using the right kind of card for your needs and lifestyle. 

JHFCU offers four credit card options and a Visa debit card so we have something for everyone! With competitive rates, fewer fees, and rewards for every dollar you spend, our credit or debit cards make it easy to swipe to cover any purchase. 

Trying to decide what type of card is best for you? Check out our debit and credit card options below!  

JHFCU Credit Cards     JHFCU Debit Cards