By Jennifer Calonia ·July 30, 2024 · 6 minute read
We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey.We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide.We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right.
When checking out at a store, you might be prompted to select whether you want the purchase processed as a credit or debit card transaction. Some debit cards with a credit card network logo can be processed as a credit payment, but the reverse — processing a credit card as a debit transaction — isn’t possible.
Still, it can make sense to use credit cards like a debit card. Understanding the difference between a credit card and debit card can help you to make strategic purchasing decisions with your credit card.
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Can You Use a Credit Card Like a Debit Card?
In terms of being a convenient, cashless payment method, a credit card can be used in-person or online in a similar way as a debit card. Credit cards require you to insert, swipe, or tap the card on a payment processing device to initiate a transaction. If used online, you can enter your credit card information into the payment field at checkout in the same way you would with a debit card payment.
However, there are also significant differences between a credit card and debit card. The most notable distinction is where the funds come from. When you use a credit card, the money is drawn from your card’s available credit line, and you might get charged additional fees and interest on your purchase.
In contrast, a debit card draws the funds you already have in an associated checking or savings account. Also, in certain situations where the final total amount might vary, such as at the gas pump, the processor might request that your card issuer place a temporary hold on your debit card funds to ensure you have enough funds to cover the transaction.
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Reasons You May Want to Use a Credit Card Like a Debit Card
Although credit cards offer numerous advantages when used responsibly, there are valid reasons to prefer using a credit card as a debit card. This may include:
• To avoid overspending. Debit cards, particularly when you’ve opted out of overdraft protection, help you to avoid spending more than you can afford to pay back. With a debit card, you can only use the funds already in your associated account, which is a tactic you could try with a credit card as well.
• To avoid finance charges or extra fees. Debit cards generally incur few charges. Additionally, they do not accrue interest since debit transactions are immediately pulled from your deposit account, in contrast to how credit cards work.
• To amass rewards without debt. The potential to earn credit card rewards is appealing, but “chasing points” can be a risky game if you overspend. The ability to use a credit card like a debit card can help keep your spending in check while earning rewards.
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Tips for Using a Credit Card as a Debit Card
You can’t technically process a credit card payment as a debit card purchase. But if your purchasing strategy is to use a credit card as your go-to payment method instead of a debit card, remember the following tips and credit card rules:
• Don’t spend more than you can afford.
• Do pay your monthly credit card statement in full.
• Don’t pay your credit card bill late or skip a payment.
• Do explore credit card rewards programs to earn incentives on purchases you already make.
• Don’t forget to review annual percentage rates (APR) and fees associated with your card.
• Do use a credit card for online payments for greater fraud protection.
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Pros and Cons of Using a Credit Card Like a Debit Card
The benefits of credit cards in comparison to debit cards vary since they’re two distinct banking products. However, each payment option has its own pros and cons.
| Pros | Cons | |
|---|---|---|
| Credit Card | • Offers greater purchasing power • Can buy items now and pay for them later • Helps build your credit • Potentially zero liability for unauthorized charges | • Can accumulate burdensome debt • Late and missed payments adversely affect your credit score • Can incur interest charges and fees |
| Debit Card | • Avoids debt by using cash you already have • No additional interest charges on purchases • Can request cash back at checkout | • Buying power is limited to the funds you have • Insufficient funds may lead to overdraft fees • Doesn’t help build credit • Fewer protections with fraudulent charges |
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Alternatives to Using a Credit Card Like a Debit Card
If you’re averse to using a credit card in a traditional sense, there are a few alternatives payment options that are akin to a debit-style transaction:
• Prepaid credit card. A prepaid credit card gets loaded with funds which then become your card’s available credit line. It gives you the convenience of a credit card but taps into cash you already have, which is similar to a debit card. Note that prepaid cards often incur fees for various types of activity.
• Cash-back rewards debit cards. If you want the perks of a credit card, like cash-back incentives, but in the form of a debit card, a cash-back debit card might be an option. These limit you to spending the funds you already have on deposit, but let you earn cash back when you use the card.
The Takeaway
Using a credit card like a debit card ultimately boils down to only spending on your card with funds you already have. Since a credit card is essentially a loan, it’s easy to accumulate overwhelming debt, plus interest charges, if you’re overspending. If you can comfortably afford to repay your credit card transactions in full each month, using your credit card in lieu of a debit card can provide access to valuable benefits, like earning rewards, enhancing fraud protection, and possibly building your credit.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Can I transfer money from my credit card to my bank account?
No, you can’t transfer money from your credit card to your bank account. A bank account is a deposit vehicle for your available cash; this cash can be accessed using a debit card. Conversely, a credit card is a financial tool that lets you access a credit line that you need to repay.
Can I use my credit card like a debit card at an ATM?
Yes, you can use your credit card like a debit card to get a cash advance at an ATM. Be warned that this is a costly option. Credit card cash advances typically have a different limit compared to your purchase limit, and they usually charge a higher APR with no grace period. Plus, you’ll owe a cash advance fee.
Can I use a credit card as a debit card with no interest?
Possibly. You might be able to use a credit card like a debit card for everyday transactions without incurring interest, if you pay every billing statement in full each month. Rolling over a balance month after month, however, will cause you to incur interest charges.
Is it better to use a debit or credit card?
Whether using a debit or credit card is a better option depends on the types of purchases you’re making and your borrowing habits. For example, credit cards are generally safer when shopping online, but buying on credit can get out of control quickly if you’re not careful.
Photo credit: iStock/filadendron
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circ*mstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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