Spending Showdown: Debit vs. Credit Cards

Jan 04, 2021 ​

Spending Showdown: Debit vs. Credit Cards


Take a look at your wallet. Most Americans carry several different payment cards in their wallets; some debit, some credit. Maybe you have a system in place for which card to use when, or maybe you use one type all the time. But do you know the difference and when it is more beneficial to use one over the other? Here, we’ll put debit cards and credit cards in a one-on-one showdown to see where and when using them may be best for your finances.


Debit Cards

First up: debit cards, which are directly linked to a savings account, checking account, or group of deposit accounts at the same financial institution. Typically, you can withdraw or spend money directly from checking, savings, and even investment accounts. Generally, there are no individual transaction fees on debit card purchases from your financial institution, but some merchants charge a nominal fee for using debit cards at points of purchase. You can also use your debit card at any ATM to withdraw cash or to get cashback at most registers — if funds are available. Some debit cards have automatic roundup savings (where the change from your purchase is rounded up to the next dollar and is automatically deposited into your savings account). With Nusenda Credit Union’s Power of Change™ program, for example, members who their Nusenda Visa® debit or breeze® debit card can opt to have their transactions rounded up to the nearest dollar, then transferred to a savings account, applied to a loan balance, or donated to a local community organization through the Nusenda Foundation.


Learn more about Nusenda checking and savings accounts, as well as our breeze™ accounts, which are perfect for kids to learn healthy money habits; for young people looking for a low-stress, easy to manage account; and for those getting financially back on track.


Smart Money Tip: Even when using your debit card, choose to pay using the credit option when asked at the register. By using credit, it saves your credit union from paying fees, which in turn allows them to pass savings on to you. With every signature-based transaction that you make with your Nusenda Visa debit card, you earn cash back and we contribute a cash reward to the community and category of your choice.*


Credit Cards

Credit cards are popular, but a little more complicated. When you use a credit card, the money is not linked to your savings or checking account, so your deposit account balance is not impacted. Instead, you can use a credit card on purchases until you reach your credit limit. When you first apply for a credit card, the issuing institution will let you know what your credit limit is, along with other terms. However, just because you may have a $5,000 credit limit does not mean you necessarily want to spend that much. Remember, you’ll have to pay it back. Plus, unlike debit cards, any purchase will also come with an added interest charge at a rate determined by your institution. That means a $100 purchase could end up costing you $120 or more, depending on how long you take to pay it off.


That doesn’t mean credit cards are all bad — they come with many benefits as well. For example, many credit cards have rewards programs that can save you money on purchases like gas or travel. Using a credit card and paying off the balance each month can also help increase your credit score.


Nusenda’s Visa® credit cards feature no annual or balance transfer fees, online account management, and card lock/unlock, plus our Platinum Rewards and Platinum Cash Rewards cards help you offer you points or cash back on purchases year-round. All Nusenda credit cards have state-of-the-art contactless technology.


Smart Money Tip: Some financial institutions offer pre-paid credit cards, which require you to pay a deposit or a certain amount upfront for you to use and borrow against. This is an easy way to start building credit, without the danger of running up a large borrowed balance. Nusenda Credit Union features a savings-secured personal loan, which is a great choice for young people who may not have had the chance to build their credit rating, but still want to be able to make major purchases or finance other activities or expenses.


The Showdown

Now that we know a little about the contenders, let’s see how they stack up against each other. It may help you to choose where, when, and how to use your card(s) effectively.


And remember, it’s our goal at Nusenda to be your trusted financial advisor. Make an appointment today to talk to one of our expert Financial Consultants — they can provide advice based on where you are in life, and help you make smart money choices for a strong financial future.


Card Type Debit Credit
Buying Power • Must have funds available
• Good for everyday purchases
• Spend up to your credit limit
• Good for larger purchases you can pay over time
• Purchases may cost you more in the long run if you don’t pay your balance off each month
Security and Liability • Most financial institutions offer zero liability for fraudulent purchases if your debit card is lost or stolen, as long as you report the loss in a timely manner
• Credit cards generally have better protection, including built-in credit and identity theft monitoring
Fees • Generally, no fees, except at ATMs that are out of network and some merchant fees for choosing debit at the register • Some cards have annual fees on top of any interest charges
Interest • Because the money comes directly out of your account, you do not incur interest charges on purchases
• Interest accrues on any balances that have not been paid in full, based on your interest rate
• Cash advance interest rates are also generally higher and will cost you a lot more than pulling money out of your account from a debit card
Rewards • Generally, no rewards, however, Nusenda offers Community Rewards
• Wider range of valuable rewards such as airline miles, gas credits, and gift cards
Credit Building • Purchases do not help you build credit • Timely payments as well as keeping your balance less than 15% of your credit limit can help build credit over time

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