Can You Use a Debit Card as a Credit Card?
Yes and no. You can indeed use a debit card at all of the same places that you can use a credit card, and you have the option of signing for debit card purchases rather than using a PIN. All you have to do is select the credit option on the payment terminal after swiping your card.
However, you cannot use a debit card to make purchases with money that you do not yet have. A credit card gives you a line of credit that you can spend and pay back over time, while a debit card necessitates having available funds in your checking account.
That is the fundamental difference between using a debit card and a credit card, but it’s not the only thing that separates the two payment options. When you use a debit card – whether you enter a PIN at checkout or use the “credit” option and sign for your purchase – you will also:
- Sacrifice Rewards Earning Potential: While debit card rewards were once fairly ubiquitous, regulatory changes made checking accounts less profitable and therefore prompted banks to raise fees and either make debit card rewards less attractive or eliminate them altogether. Rewards credit cards typically give you at least 1% cash back (or the points/miles equivalent) for each dollar that you spend.
- Increase Your Fraud Susceptibility: Visa, MasterCard, American Express, and Discover all offer blanket $0 liability protection for any unauthorized purchases made with your credit card account. While the same is true of signature debit card purchases, there are caveats to the fraud protection that you receive when making PIN debit card purchases and debit-based accounts inherently make fraud more difficult to deal with given that money is removed from your account when a purchase is made. Since you don’t have to pay for credit card purchases immediately, you’ll be able to spot and report fraud without having to go through the added trouble of getting your money back.
- Forgo Credit Building: Debit card activity is not included in your credit reports and therefore do not help you improve your credit score. By making on-time credit card payments or simply having an open credit card account that you never use, you’ll be able to add positive information to your credit files on a monthly basis and thereby improve your credit standing. This is very important because having good credit can save you a lot of money.
Using a Credit Card as a Debit Card
Interestingly, the question of whether you can use a debit card as a credit card can be flipped around. In other words, it’s possible to effectively use a credit card as a debit card.
When you set up your credit card to be paid automatically from your checking account (otherwise known as ACH payments), you essentially do not have to worry about making on-time payments. This is very similar to the peace of mind you receive when using a debit card. The only difference compared to using a debit card directly is that with a credit card you actually have time to spot any errors or fraud on your statement before any money actually gets withdrawn from your bank account.
If you don’t want to worry about carrying a lot of cash around with you, a debit card is a great option. Similarly, a prepaid card serves as a viable debit-based payment alternative if you do not have a traditional checking account. You can use either option as a credit card by signing for your purchases rather than inputting a PIN, but that will not enable you to finance transactions with money that you do not personally have yet.
Image: Slavoljub Pantelic/Shutterstock
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