Do you ever find yourself in the checkout line at the grocery store, reaching in your purse or wallet and handing over whichever card you grab first? You may think it doesn’t matter what type of card you use, but there are actually significant advantages to using certain forms of payment depending on the situation.

Your debit card is like using cash. The money is taken directly out of your checking account. However, when you use a credit card, you are borrowing money to buy something with the intention to pay it back later.

It can be confusing to know which plastic is best to use when, so read on for some tips that can help you make the most out of both types of cards.

The advantages of debit cards

With a debit card, it’s hard to go over budget because you can only spend the amount of money you have in your account. And budgeting is the most important aspect of our financial plans. Without a budget, it can be easy to go into debt by over-using a credit card. In fact, a 2019 survey from Bankrate shows that 29% of American households have more credit card debt than they have in their emergency savings.

Debit cards are accepted virtually everywhere and they are easy to grab on the go. In addition, they are typically easy to obtain, even if you have a low credit score. Using a debit card is a great way to begin learning how to balance your checkbook and manage your money. In general, the best use of your debit card is for smaller transactions like groceries and everyday items. This can help you begin to budget and understand the importance of tracking your purchases.

The advantages of credit cards

When we talk to customers about credit cards, our biggest piece of advice is to purchase only what you will be able to pay off at the end of the month. This will help you stay out of debt and enable you to use the card for big purchases as they arise.

In addition, reserving your credit card for significant costs such as travel or unexpected home repair can be beneficial because you can earn points through a rewards program. Different credit cards cater to different needs customers may have. Some offer cash back, while others offer double points on travel or sign-up bonuses. Finding the best option for you will help you earn rewards in ways that are meaningful to your personal situation.

One of the most significant advantages a credit card offers is the opportunity to build a positive credit history, which will help you secure better terms on a car loan or mortgage. Be mindful, however, that this only happens as long as you are diligent and make the minimum payment toward your card on time every month.

A blend is best

For most people, a blend of using credit and debit cards strikes the right balance. Credit cards can be useful financial tools if you can pay off the balance in full at the end of every month. It’s best to start small with purchases you are sure you can pay off every month and re-examine your spending habits if you find yourself in debt.

Determining which piece of plastic to use for purchases can initially be confusing, but if you monitor your debt and spending and stick to your budget, you can make both payment options work in your favor.


Kristine Batch is senior vice president and senior regional delivery manager of personal banking at UMB Bank.