“Can I Use My Debit Card as a Credit Card?” 3 Things to Know

"Can I Use My Debit Card as a Credit Card?"  3 Things to Know

credit card advice

Shannon McNay
By: Shannon McNay
Posted: December 6, 2016
Opinions expressed here are ours alone, and are not provided, endorsed, or approved by any issuer. Site may be compensated through the issuer affiliate programs.

Leave it to banks to make something simple as confusing as possible. Giving consumers a debit card and then providing the option to choose “credit” or “debit” without explaining why definitely stands up as something that’s unnecessarily confusing.

So when you’re at the counter and being asked if you want to use “credit” or “debit” on your debit card, do you really know what you’re being asked? For a long time, I certainly didn’t.

There are distinct differences between these two types of transactions — and they are important to know. Below are a few things you should understand about these transactions so you can make the right choice.

1. “Credit” Doesn’t Mean Pay Later

First of all, let’s discuss the misleading nature of the word “credit” in relation to your debit card. Selecting this option at the time of purchase does not suddenly turn your debit card into a line of credit you can borrow from.

In other words, although you can choose “credit” when purchasing something with your debit card, you cannot use your debit card the same way you would a credit card.

Here’s what happens when you choose credit. Rather than have the transaction go through in real time the way it does with a debit card, the transaction happens offline. Once the merchant batches their receipts and reconciles them with the credit card company, then your charge goes through. This can take roughly two to three days.

So the charge may not necessarily be removed from your account that day, but it will be removed in a few days. Whereas with a credit card, you get a bill each month and you decide how much to pay. When you swipe a debit card and choose “credit,” the full amount of the purchase will eventually be pulled from your bank account.

2. “Debit” is Like Using an ATM and May Include Fees

Since the money is leaving your account either way (rather than when you pay a credit card bill), it may seem easier to just use the “debit” option. However, there could be a fee to do this. The fee isn’t a lot (less than a quarter per transaction), but if you swipe your card on a day-to-day basis, those fees can start adding up.

When you swipe your card and choose debit, you’ll be asked to enter your PIN. Most banks do not charge a fee for inputting your PIN, but it’s important to check with your financial institution beforehand. This is just like withdrawing money from an ATM. Make sure you have the funds available for your purchase amount at the time of purchase, or else you could end up overdrawing your bank account.

If you want a no-fee way to make purchases — along with payment flexibility and added security — a credit card with no annual fee or a 0% introductory APR may be the way to go.

Top 3 No Annual Fee Cards

The following three cards have no annual fee and are excellent options for those with good credit (generally a credit score above 700).

  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Unlimited 1% cash back on all other purchases — it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.24-23.24%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Enjoy new 5% categories every 3 months like gas stations, restaurants, and wholesale clubs
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0%
15 months
0%
15 months
14.24%-23.24% Variable
$0
Excellent/Good
Discover it® Cashback Match™ Review

at Discover'ssecure website

CASH BACK RATING

★★★★★
5.0

OVERALL RATING

5.0/5.0
  • Our Take: "One of our favorite cards, with long 0% intro APRs, low ongoing APRs, awesome cash back rewards, and lots more.
  • 5% cash back in categories that rotate quarterly, up to $1,500 per quarter when you sign up for the quarterly bonus
  • 1% cash back on all your other purchases
  • Matches the cash back you've earned at the end of your first year (only for new cardmembers)
  • No limit to the amount of cash back that can be matched"
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0%
14 months
0%
14 months
11.24% - 23.24% Variable
$0
Excellent/Good

EXPERT'S RATING

★★★★★
4.9

OVERALL RATING

4.9/5.0
  • Enjoy a one-time bonus of 20,000 miles once you spend $1,000 on purchases within 3 months of approval, equal to $200 in travel
  • Earn unlimited 1.25 miles per dollar on every purchase, every day and pay no annual fee
  • Fly any airline, stay at any hotel, anytime
  • Enjoy a low intro APR on purchases for 12 months; 12.24%-22.24% variable APR after that
  • Travel when you want with no blackout dates
  • No foreign transaction fees
  • Miles don’t expire and there’s no limit to how many you can earn
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 12 months
N/A
12.24% - 22.24% (Variable)
$0
Excellent, Good Credit

Another nice feature of these cards is the associated rewards programs. You can earn cash back, air miles, or points toward merchandise and travel you wouldn’t otherwise receive by using a debit card. A few financial institutions offer debit card rewards, but they’ve been harder to come across since the 2008 financial crisis.

Top 3 Introductory 0% APR Cards

The following cards charge no interest on purchases for the duration of the introductory period, providing cardholders a very forgiving repayment plan — just be sure to pay your balance before the intro period ends.

  • $0 Introductory balance transfer fee for transfers made during the first 60 days of account opening
  • 0% Introductory APR for 15 months on purchases and balance transfers
  • Monthly FICO® Score and Credit Dashboard for free
  • No Penalty APR - Paying late won't raise your interest rate (APR). All other account pricing and terms apply
  • $0 Annual Fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0%
15 months
0%
15 months
13.24%-23.24% Variable
$0
Excellent/Good

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

5.0/5.0
  • Unlimited 1.5% cash back on every purchase — it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.24-23.24%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Redeem for cash — any amount, anytime
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0%
15 months
0%
15 months
14.24%-23.24% Variable
$0
Excellent/Good
Wells Fargo Propel American Express® Card Review

at Wells Fargo'ssecure website

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • Earn 3X points at U.S. gas stations, 2X points at U.S. restaurants, 1X point on other net purchases every day
  • $0 Annual Fee
  • 0% Intro APR for 15 months on purchases and balance transfers, after that the variable APR will be 13.24%-25.24%
  • Enjoy exclusive offers on airline tickets, hotels, car rentals, and cruises
  • Redeem points for travel, gift cards, cash redemption options or merchandise through Go Far™ Rewards
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Propel American Express® Credit Card
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0%
15 months
0%
15 months
13.24%-25.24% (Variable)
$0
Excellent/Good

+See more 0% intro APR cards

3. Selecting “Credit” Can Make It Hard to Track Your Budget

Since credit transactions take a few days to process, it’s important to keep track of your transactions daily. If you don’t and you end up relying on your account balance instead, you could be in for a huge surprise in a few days.

This is really important because of one thing: overdraft fees. If your account goes negative, you could be charged upward of $35 for every single transaction that goes through after you hit a negative balance. It only takes a few swipes of the card to dip your account several hundred dollars in the red. This can be avoided if you sign up for overdraft protection, in which case those negative transactions go through to a line of credit. However, there are still small fees for this (nowhere near as high as overdraft fees, though).

Even if you keep track of your budget every day, make sure you do so with your receipts. If you rely on the transactions you can see online, you’re going to be looking at some weird numbers. For example, gas stations might only authorize $1 at the time of purchase to make sure your card works. Or some might charge $50-$100 to cover the potential cost of your charge. A restaurant may also overcharge since they have to leave room for you to add your tip at the end.

In all of these instances, the charges will be reconciled in a few days. But a lot of damage can be done in those few days if you’re not keeping track of your balance based on your receipts.

How to Choose Between “Credit” and “Debit”

If you’re left wondering what the best option is after all this, the answer really just depends on your lifestyle. If you’re a master budgeter and would rather not enter your PIN every time you make a purchase, then choosing credit is a fine option. But if you don’t trust yourself to track your receipts daily, debit is the better way to go.

And if safety is your biggest concern of all, then the question comes down to whether you should even use a debit card. While the new chip and pin technology is a major improvement for security, using a card that has any access to your bank account could have more hazardous effects on your finances than swiping a real credit card that only has access to a line of credit.

For my part, I prefer to use my debit card at the ATM only. Then I use cash for most purchases and a credit card if I have to. That way, if a fraudulent transaction happens, the money in my bank account is still protected. And finally, I make sure to pay my credit card online when I make these transactions, ensuring that I don’t have to deal with interest charges or fall into debt.