Debit cards and credit cards are convenient and easy ways to pay, so it’s no surprise that these two forms of plastic have eclipsed cash as the dominant payment methods today.

According to a Federal Reserve Bank of Atlanta report, we make about 68 payments per month on average. Of those, debit cards get the most usage (for 23 payments), followed by credit cards (18 payments) and cash (14 payments). And due to increased online and contactless payments, the pandemic also accelerated consumer preference for debit and credit.

But are there times when paying by debit makes more sense than paying by credit? And are there reasons why tapping a credit card may have financial advantages over swiping a debit card? We continue our Debit Card Series by exploring important things to consider when deciding whether to use your credit card or debit card for a purchase or bill.

Debit or credit? 3 factors to weigh first

Your budget style and personal spending habits. In a nutshell, debit cards can help keep firm spending limits in check and credit cards can offer some meaningful benefits for disciplined spenders.

Your credit record. If you’re working to build credit history or improve a credit score, prudent use and on-time payments on a credit card account can help demonstrate responsible credit management. That’s because credit card activity gets reported to the three main credit bureaus as part of your credit report, while debit card accounts do not.

The type of item and size of the payment. Debit cards usually have daily spending limits. That means they may be better suited for smaller, essential purchases rather than one-time, big-ticket items. Credit cards could be helpful for making large purchases or handling unexpected expenses that you either can't or don't want to pay in full right away. Sometimes it’s just simpler to pay once a month for certain things you buy, and credit cards give you a built-in grace period before the bill is due.

With those factors in mind, here are some other considerations that highlight the differences between the two methods. Use them to help guide your choice.

3 situations where credit cards win

Credit cards may offer a number of important cardholder benefits that debit cards may not. For example:

Purchase protection. Many cards provide additional warranty, replacement coverage, expanded return and guaranteed price protection benefits. Say you found a great price for a new outdoor grill only to see that price drop a month later. If you paid with a credit card that has a price protection benefit (and most major card issuers do), you could get reimbursed for the price difference.

Fraud protection. What if your card is lost or an identity thief gets access to your credit card or card data? Most major credit card issuers have zero-liability protection for fraudulent purchases that are reported promptly. Debit cards, in comparison, generally have a $50 maximum if you notify the bank within two days of learning a card is missing. After that, liability may increase.

Rewards and cash back. It’s no secret that many credit cards offer an ever-growing array of valuable rewards such as travel savings, cash back or gift cards. And, more than half of cardholders (56%) say that rewards now drive their choice of credit card company, according to a recent poll by GigaPoints/Ipsos.

With Spectrum's variety of credit card options, you can tailor the types of rewards that best match your spending patterns and financial priorities — choosing among cards offering 5% cash back in two purchase categories or unlimited 1.5X rewards on every purchase.

3 situations where debit cards win

Debit cards can also offer some attractive advantages that credit cards don’t provide. For example:

Cash-flow control and flexibility. As you know, debit cards are linked directly to your checking account, using your account’s available balance to pay for whatever you buy. With debit cards, purchase limits are more immediate and concrete, which may help you stick to a budget and avoid overspending. In that way, debit offers an accountable, real-time approach to money management.

Moreover, debit cards offer unmatched convenience — ending the need to stop at an ATM before heading to the restaurant or write a check while waiting in line at the grocery store.

No interest charges or annual fee. With debit cards, you’re never charged interest on purchases or a yearly fee. With credit cards, interest charges or fees can accrue on account balances that aren’t paid on time or in full each billing cycle — and that can lead to costly debt.

Money-saving deals. Some debit cards will offer special discounts or exclusive coupons that become available to you as you make purchases. Paying attention to various debit-card promotions can save you money at retailers you frequent or make you eligible for other perks. For example, from now through December 31, 2021, Chevron FCU and Spectrum CU members have a monthly chance to win a $1,000 Mastercard Prepaid® card when making a purchase with their Mastercard debit card.*

Opting for convenience and choice

When it comes to deciding when to use debit cards and credit cards, each method has its pros and cons. If you like the convenience of paying with plastic but prefer to spend within the limits of your credit union account balance, you might reach for your debit card more often. And if you like using your credit card for automatic bill paying and larger purchases, letting your credit card do the job might make sense.

The bottom line? Both methods can support the flexibility and confidence you need for many types of payment situations.

*For official rules, please visit Mastercard Community Surprises.