The Credit Card vs Debit Card Debate

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In This Post:

      1. Introduction
      2. Advantages of Credit Cards
      3. Disadvantages of Credit Cards
      4. Advantages of Debit Cards
      5. Disadvantages of Debit Cards
      6. If I Don’t Have A Credit Card, Can I Still Earn Rewards?
      7. Point Card
      8. Bilt Rewards
      9. Cash App Cash Card
      10. American Express Rewards Debit Card
          1. Conclusion

Credit cards and debit cards may look very similar but there are differences between them.  A credit card has a credit limit and requires monthly payments.  You may have to pay Interest, late fees and annual fees.  Credit cards have features such as purchase protection, extended warranty coverage, rental car coverage, the ability to earn Airline and Hotel miles, airport lounge access, etc. A debit card works by linking to your checking account and money is deducted from the checking account.  In this article I am going to breakdown the advantages and disadvantages of credit cards and debit cards and offer some alternatives to credit cards.

Advantages of Credit Cards

  • Build Your Credit History
  • Protection Against Fraudulent Transactions
  • Extended Warranty Coverage
  • Price Protection, Purchase Protection and Return Protection 
  • Early Access to Concert and Event Tickets
  • Rental Car Coverage
  • Mobile Phone Insurance
  • Earn Cashback, Transferrable Points, Airline Miles and Hotel Points

Disadvantages of Credit Cards

  • Paying High Interest Rates
  • Temptation To Overspend
  • Late Fees and Annual Fees 
  • Applying Adds An Inquiry To Your Credit Report
  • Your Credit Score Can Decrease For Late Payments

Advantages of Debit Cards

  • No Late Fees or Interest Payments
  • No Debt
  • No Credit Needed

Disadvantages of Debit Cards

  • Limited Time To Dispute Fraudulent Activity
  • It Will Not Help Increase Your Credit Score
  • You Are Limited To The Amount Of Money In Your Bank
  • If Fraud Occurs Money Will Be Deducted From Your Account 
  • Limited Rewards and Benefits

If I don’t have a credit card can I still earn reward points?

Yes you can!. There are a number of banks that have the ability to earn points and cash back with Debit card Purchases.  Some of the best ones are, Point Card, Built Rewards, American Express Rewards Checking and the Cash Card from Cash App

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The Point Debit Card is a new card on the market.  It features benefits that even some of the best credit cards don’t offer.  They state that they offer a total $1,435 in benefits.  There is a membership fee.  It can be paid annually for $99.99 or in monthly installments of $9.99 with a minimum of a three month commitment of $29.97. 

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The Benefits

  • Earn 5x Points on Streaming Subscription Services
  • Earn 3x Points on Food Delivery and Ride Share Services
  • Cell Phone Insurance
  • Trip Cancellation and Travel Accident Insurance 
  • Event Cancellation Insurance
  • Rental Car Coverage
  • No International Transaction Fees
  • 2 Free ATM Withdrawals Per Month

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Built Rewards is also a new option.  It is currently available by invitation only although you can signup for the waitlist to be notified when it is available to the general public.  This card is great for renters as they market it as a card that lets you earn points for paying rent without any fees.  Bilt Rewards’ best feature is that it has transfer partners that you can transfer points to.  Transfer partners are usually included on credit cards that annual fees starting at $99.

The Benefits

  • Earn upto 50,000 Points Per Year for Paying Rent
  • Earn 3x Points on Dining
  • Earn 2x Points on Travel
  • No Annual Fee 
  • Upto $60 Lyft Credits Per Year
  • Upto $120 Doordash Credits Per Year
  • No International Transaction Fees
  • Cellphone, Rental Car and Travel Insurance
  • Unlock Status Levels That Feature Additional Benefits After Earning 25,000, 50,000 and 100,000 Points
  • Transfer Your Points to: American Airlines, Air Canada, IHG, Hyatt, Turkish Airlines, Air France, Emirates, Hawaiian Airlines, and Virgin Atlantic
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You may have heard of Cash App.  The Cash Card is a Debit card product from Cash App.  It uses funds from your Cash App balance to pay for transactions.  The Cash Card has limited benefits but if you use their Boosts, you could save money at certain retailers

The Benefits

  • ATM Withdrawal Fee Reimbursements (Requires Minimum $300 Monthly Direct Deposit)
  • No Annual Fee
  • Compatible with Google Pay and Apple Pay
  • No Annual Fee
  • Boosts offering select categories features upto 30% off at many well known retailers
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The American Express Rewards Checking account is another new option.  It earns the same Membership Rewards that you can also earn with their Platinum, Gold and Green credit cards.  This could be a great option for someone who wants to get into the points game without having to open a credit card.

The Benefits

  • Earns 1 Points for every $2 Spent
  • No Annual Fee
  • Fee Free ATM Withdrawals at Money Pass ATM’s
  • Transfer Points to Amex’s 21 Airline and Hotel Partners

Conclusion

It turns out there are some options to earn points and miles with Debit cards.  These options are great for beginners or someone who has bad credit.  If I had to rank them, The Point Card is the number one option even with a $99 annual fee., followed by Bilt Rewards, American Express Rewards Checking and Cash Card.  One major downside to Cash Card is that deposits are not FDIC insured.

This Post Has One Comment

  1. Greg

    Nice write up

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