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As someone who’s learned the hard way, I’ll cut to the chase: Your debit card isn’t always your best friend. Sure, it’s convenient, but it’s also directly connected to your bank account. That’s why there are several places and situations where using your debit card puts your money at risk, takes away potential rewards and provides little to no purchase and travel protections.
I’m not saying you should ditch your debit card, since it still has its place. So let’s explore where you shouldn’t use your debit card — and when you should.
5 places you shouldn’t use your debit card
Instead of my debit card, I use my credit card at restaurants, gas stations, hotels and more. Why? It’s not just about security — it’s saved me a lot of money and headaches over time.
1. Restaurants: How your debit card can leave behind a bad taste
As a certified personal finance educator, I’ve digested a lot of financial information. One of the most valuable lessons I’ve learned is that restaurants aren’t a great place to use a debit card.
Why not to pay with debit at restaurants
Tip adjustments. When you pay for your bill with a debit card, the restaurant puts a hold on your account for the total bill amount and then adjusts it after to include your tip. This two-step process leaves room for mistakes, and it’s tricky to dispute an erroneous charge or tip amount after your bank has already processed the transaction and debited the money from your account.
Missed rewards. Most debit cards don’t offer rewards on your spending, including at restaurants. Think of credit card rewards as a small discount on every meal. If you have a rewards card, using debit over credit means you’re leaving money on the table.
Exclusive dining access. Debit cards are pretty slim on benefits, and it’s hard to find one that gives you access to exclusive culinary events or special spots at popular restaurants the way a premium rewards card can.
How you should pay instead
Use a credit card for takeout and dining to ease the process of disputing wrong, duplicate or unauthorized charges, if you need to. And you won’t have to pay the disputed amount until the credit card issuer investigates the issue on your behalf.
Choose a credit card that returns rewards on your spending at restaurants, on takeout or on food delivery in the form of points or cash back. These rewards can add up to big savings over time.
Unlock even more benefits by opting for a premium dining card, such as the American Express Gold, which offers perks in the form of exclusive dining credits and access to culinary events in addition to points on your everyday spending.
My restaurant card strategy
I always carry a credit card that offers at least 3% cash back or 3x points per dollar on dining. For example, the Capital One SavorOne comes with unlimited 3% cash back on dining, entertainment, grocery stores and more, making it a useful card option when I’m at a drive-through or restaurant. By using it consistently, I’ve earned enough rewards to treat myself to several great meals at fancier restaurants.
2. Gas stations: How your debit card can leak money at the pump
Filling your gas tank shouldn’t empty your bank account, but swiping your debit card might do just that. Gas stations and debit cards mix as well as oil and water.
Why not to pay with debit at gas stations
Large holds on funds. I recall how my heart dropped after seeing a $150 charge on my debit card before I began fueling. Turns out, swiping debit at the pump triggers a high preauthorization charge gas stations use to guarantee they’ll get full payment after you refill. The purchase amount isn’t final until the transaction is complete, but the initial hold can take several days to clear.
Missed rewards. Just like at restaurants, fueling up with debit means you could be missing out on valuable credit card rewards you can accumulate over time and put toward travel or statement credits instead.
Skimming devices. Gas stations are known targets for credit card skimmers, devices that criminals illegally install at fuel pumps to steal your card number and PIN. This fraud isn’t exclusive to debit cards, but once a criminal has your card information, they can more easily drain your bank account — which they can’t do with a credit card.
How you should pay instead
Add a protective layer between your bank account funds and your daily transactions with a credit card offering security and protection against fraud, loss or theft, if you need it.
Use a credit card for gas purchases to avoid large holds on your bank account balance. Instead, the hold is put on your card’s line of credit and you’ll pay the final charge with your monthly statement.
Choose a credit card that offers bonus rewards or cash back at gas stations, which can add up quickly each time you refill.
My gas station card strategy
Many credit cards that earn rewards at the pump offer up to 5% cash back — that’s a $2.50 reward on a $50 gas refill. One example is the Citi Custom Cash, which earns 5% on your top eligible spending category up to $500 every month. Its categories include gas stations, restaurants, grocery stores and more. Cards like the Citi Custom Cash that offer elevated rewards on several categories save my poor memory the extra work needed to remember which card to use.
Dig deeper: Top 15 financial scams targeting older Americans — and what you can do to keep your money safe
3. Hotels: You can check out with a debit card, but your money might not
As someone who’s passionate about traveling, I’ve checked into more hotels than I can count. Along the way, I’ve learned that when it comes to accommodations, my debit card is better left resting in my wallet.
Why not to pay with debit at hotels
Hefty holds. Hotels often place large holds on your bank account that can be more than your entire stay to cover potential extra charges, like room service, special requests and damages. These holds can tie up your holiday funds over your stay — and can even trigger overdraft fees, if you’re not careful.
Lack of travel protections. Debit cards don’t often come with travel protections like trip cancellation coverage or emergency evacuation assistance. It means you’ll pay out of pocket for any travel plan changes or unexpected events that can inevitably occur away from home.
Limited dispute options. It’s hard to contest erroneous charges when they’re already gone from your bank account. I learned that the hard way when I lost $150 due to a billing error at a hotel that was never fixed.
How you should pay instead
Use a credit card for hotel bookings to avoid large holds on your bank account’s balance. You’ll pay for your stay with your monthly card statement instead.
Opt for a travel credit card that offers a range of travel protections and financial help when plans change due to sickness, severe weather, injury or a sudden change of plans.
Leave a credit card number at check-in for room service, reservations or other charges you’ll make over your stay to simplify the process of disputing any incorrect items on your final bill.
My hotel card strategy
I like keeping a dedicated travel credit card in my wallet. Among the best travel cards are the American Express Platinum and Chase Sapphire Reserve, which earn 5x and 10x points per dollar spent, respectively, when you book a stay through their travel portals. It’s like earning 5% to 10% back on your travel. These two travel cards have also saved me thousands of dollars after travel plans went out the window due to bad weather, delayed flights and more.
4. Car rentals: How your debit card can slow down your trip
Buckle up, because renting a car with a debit card can turn a smooth transaction into a bumpy financial adventure. Many car rental companies wish you’d treat debit cards as you do a spare tire — used only when absolutely necessary. Steer clear of using them as a payment method when you’re planning to hit the road.
Why not to pay with debit at car rental counters
Debit card restrictions. Even if a rental car company accepts debit for payment, it might require a hard credit inquiry, evidence of travel plans or a credit card on file — even if you’re paying with a debit card — before allowing you to drive off the lot.
Excessive holds. Most car rental companies place an additional hold on your account that acts as a security deposit, guaranteeing payment for potential damage. This deposit locks up your funds for the entire length of your rental and is «repaid» to you up to a week after.
Lack of insurance. Debit cards offer little in the way of car rental insurance, forcing you to either pay out of pocket for coverage or be liable for any damage to your rental car.
How you should pay instead
Use a credit card when booking and paying for your rental car to avoid needless complications and potential credit checks that can temporarily impact your credit score.
Choose a credit card for your rental car’s security deposit to keep your bank funds free from excessive holds.
Opt for a credit card that offers car rental insurance or a collision damage waiver when you use it to pay for your rental. This typically covers your rental against damage, theft and more.
My car rental card strategy
I always use a premium travel credit card like the Capital One Venture X at car rental agencies to avoid headaches and simplify the paperwork needed before I can get on the road. Venture X offers primary (not secondary) car rental coverage, which means it kicks in for the situations it covers before requiring my personal auto insurance.
5. Large purchases: When your debit card might not measure up
I love technology and gadgets, but upgrading to the latest phone or the sleekest fridge usually comes at a hefty price. Paying for large purchases upfront with your debit card could mean footing the bill should any problems arise.
Why not to pay with debit for large purchases
No purchase protections. While credit cards typically come with purchase protections that act like insurance for your purchases, debit cards don’t. If your warranty doesn’t cover a crack on your new phone’s screen or a component in your new microwave, it’s up to you to pay for a fix out of pocket.
No payments over time. Debit cards pull the entire cost of an item from your linked bank account right away. Unlike a credit card that allows you to pay for large purchases over time, using a debit card means you miss out on financing opportunities that can improve your cash flow.
Missed rewards. Big-ticket items are an ideal way to earn a large amount of points or cash back on your purchase. Sadly, the majority of debit cards don’t offer rewards on the purchases you make.
How you should pay instead
Use a credit card with strong purchase protection when buying large items, which can act as insurance against damage and theft for up to 90 days after you swipe. Many cards also offer extended warranties that add up to a year to your manufacturer’s warranty.
If you’re planning a big purchase, apply for a credit card offering 0% intro APR for 12 months or longer on new purchases. You can then pay for expensive items over time without worrying about hefty interest charges.
Choose a credit card that offers high base rewards on all purchases, regardless of which spending category they fall into, to maximize your return on big-ticket items.
My large purchase card strategy
When I’m eyeing a major purchase, I choose from my credit cards one that offers the strongest protections and rewards on the item I’m buying. Better yet if it has an active 0% intro APR offer.
That’s why I love my Chase Freedom Unlimited. It offers purchase protection, extended warranty coverage and a base rewards rate of 1.5% on all purchases. New customers may be eligible for a lengthy intro APR offer of 15 months. All of these benefits with no annual fee — what a deal!
When you should use your debit card
While there are several places and situations where credit cards shine, your debit card still has its place and time. Here’s when you should opt for your debit card over a credit card.
Cash withdrawals. Your debit card is your go-to for withdrawing cash at an ATM machine. (Just watch out for skimmer devices to avoid debit card fraud.) Taking out cash from an ATM with a credit card can be quite costly, since this counts as a cash advance and attracts high interest almost immediately.
Paying for rent, mortgage or loan payments. Most landlords and financial institutions won’t accept credit card payments — or they charge a fee when they do. That’s where your debit card can be the more economical option.
Farmers markets and small businesses. Swiping your debit card for coffee at your local cafe or fresh produce at the farmers market is a way to support your local community. That’s because credit card companies charge processing fees that can eat into a small merchant’s profits.
Dig deeper: 5 practical ways to keep your financial information and identity safe online
FAQ: Debit cards and safe payments
Can someone use my debit card without my PIN?
Yes, your debit card can be used without its PIN. While in-store purchases typically require entering your PIN, online purchases, for example, typically require only the debit card number, expiration date and security code. Some debit cards also support tap-to-pay transactions, which don’t always require your PIN.
How can I protect myself against card skimmers?
Skimmers are sophisticated devices that can steal your credit or debit card information, sending those details to fraudsters who then use it to run up charges on your accounts. Skimmers are designed to look like a legitimate part of an ATM or point-of-service system, but you can spot them by looking for clues like odd placement or misalignment with the machine. Before inserting your card, give the device a shake — if it moves or otherwise isn’t firmly in place, do not use the device.
Is it safe to use a debit card online?
Yes, but as with many payment options, using your debit card online carries some risk you can reduce by being cautious about where you shop. Before using your debit card online, verify that the website you’re on is the legitimate website of the merchant. Opt for intermediary payment options such as PayPal, when available. And don’t use public WiFi networks to avoid exposing your personal and financial information over an unsecure connection.
Can someone access my bank account with my debit card?
Yes. Because your debit card is often directly linked to your bank account, somebody with your debit card or number can easily access your funds. That’s why it’s a smart move to put a limit on your daily or weekly debit card transactions through your online account or mobile app. Additionally, most banks that issue debit cards use fraud detection systems and zero-liability protection, which means you won’t be responsible for fraudulent charges if your card is lost or stolen.
About the writer
Yahia Barakah is a personal finance writer at AOL with over a decade of experience in finance and investing. As a certified educator in personal finance (CEPF), he combines his economics expertise with a passion for financial literacy to simplify complex retirement, banking and credit topics. He loves empowering people to make informed financial decisions that improve their everyday and long-term wellness. Yahia’s expertise has been featured on FinanceBuzz, FX Empire and EarnForex. Based in Florida, he balances his love for finance with freediving, hiking and underwater photography.
Article edited by Kelly Suzan Waggoner
