When Should I Not Use My Debit Card?

People who want the convenience of using a credit card but don't want to run the risk of getting into debt may turn to debit cards instead. Debit cards closely resemble credit cards, but they are typically tied to a bank checking account, meaning the necessary funds to cover a purchase must already be in the account. Despite their ease of use and debt-avoiding advantages, debit cards may not be the best choice in some situations.

Shopping Online

While e-commerce websites will often gladly accept your debit card when you buy merchandise, using your debit card does pose risk. Because your debit card is tied to your checking account, you could fall victim to an identity theft or hacker who could drain the account if he gets your card number. Many banks offer liability protection, but it can still pose quite a problem until you are able to resolve the situation and you may not be able to use the card in the meantime.

Automatic Drafts

Many businesses allow you to pay your monthly bill by setting up your debit card to make an automatic withdrawal. If you forget to put the money into your checking account in time, you could incur an overdraft charge. If you pay several bills in this manner, it can be difficult to track all your purchases. If a billing error occurs resulting in an extra payment taken out of your checking account, you also could be vulnerable to an overdraft. A credit card may be a better option for automatic withdrawal situations.

Expensive Items

When purchasing expensive products like electronic equipment or household appliances, debit cards often do not provide the same protection as credit cards. If the merchandise is defective, you may not have the same dispute rights that are typically offered by credit card companies. Some credit cards also come with automatic extended warranties for all purchases. Large purchases can take a big bite out of your checking account if you are required to pay the full price upfront.

Establishing Credit

Debit cards are not helpful if you are trying to establish a credit history. If you're young and using credit for the first time or recovering from a serious financial setback like bankruptcy, debit card use is not reported to the three major credit bureaus, so it won't boost your score. Responsible use of a credit card is a good way to establish a favorable credit history. If you have difficulty obtaining an unsecured credit card due to past problems, a secured credit card, which requires you to put up cash to serve as collateral, can get help get you on the right track.