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Credit Versus Debit- Which Offers Greater Rewards?

Posted In:  credit cards

There has been an increased awareness of the credit card versus debit card debate in recent months. This is not surprising as more consumers are making a conscious effort to spend less money and reduce debt. The credit card industry has been offering rewards programs for many years and in some cases these programs are very lucrative for individuals who manage their credit responsibly. As concerns increase over changes in the credit card industry more people are finding that credit card rewards programs may not be as beneficial as they were in recent years.


With the number of debit card transactions on the rise, issuers of debit cards are implementing rewards programs to further entice consumers to use their debit cards for every transaction. While it may be tempting for people who use credit cards solely for rewards to drop their current program and switch to a rewards program through their debit card, consumers are urged to proceed with caution. Changes in the industry have lead to speculation that credit card rewards programs may become less "rewarding" however they still remain more beneficial than most current debit card programs. Here are a few things to consider before switching to a debit card rewards program.


  • Credit cards remain the safer alternative- There are many benefits to using a debit card for day-to-day purchases however credit cards remain the safer option. Credit cards simply offer more protection against theft or fraudulent use than debit cards. If you are opting to not carry cash and use plastic as your main method of paying for purchases, it is important to know what type of protection is offered by each card in the event that card is lost or stolen.
  • Debit card rewards programs require patience and money- One of the reasons credit card rewards programs are popular among not only card holders but also card issuers is the money made off of these programs. The bank issuing the credit card makes money as well as the card holder who also benefits in the form of cash, airline and other rewards. Debit card use does not generate as much money as credit card use, therefore you must spend considerably more before you begin to see the rewards you seek. In some cases you might have to actually spend twice as much money with your debit card to see the same rewards as you would with your credit card.
  • Understand the terms- As with all other financial agreements it is important to fully understand the terms and conditions of each rewards program. There are often annual fees associated with both debit and credit card rewards programs. You should also understand how you will earn your rewards, how they are paid (monthly, annually) and if your rewards expire. Without understanding these issues you may find yourself using a rewards program that really doesn't offer you many rewards after all.

The best way to determine which rewards program will work for you is by closely examining your current and potential spending habits. If you pay your credit card balance in full each month you will more than likely continue to gain more benefits by sticking with your current program. On the other hand if you either do not pay your balance or do not use credit cards frequently your best bet might be sticking with the less lucrative yet more realistic rewards you will gain by using your debit card.


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Re: Credit Versus Debit- Which Offers Greater Rewards?

Obviously both debit cards and credit cards have their advantages - just ask anyone who has one, however a good point to remember is that while the banks and other credit card providers do their best to prevent credit card fraud, it does still happen. The thing is though, if someone gets hold of your debit card details, the money that is stolen is your own rather than money you are borrowing from the bank so if this does happen to you then you could be out of pocket for quite some time before your money is recovered!
However that is obviously a worst case scenario so don't let this put you off either option. Just be vigilant with checking your statements!

Re: Credit Versus Debit- Which Offers Greater Rewards?

Kim_Mango's picture

After selling my home I decided to rent for awhile.  To my surprise, the rental agency accept credit cards for monthly rent!  Now, this is not a good idea if you're in debt to your eyeballs, but if you are debt free looking to get rewards, not only do you get to delay paying rent for a billing cycle, you earn a ton of points from this!
All my best,

Re: Credit Versus Debit- Which Offers Greater Rewards?

While I have always had a CC with "rewards" of some type, what  I have always valued most about my CC is the fact that I can delay paying for the item that I buy today for at least 30, and possibly 60, days due to the billing process and the grace period that all CCs grant. Of course, in order to make this strategy work, you have to pay off the entire CC balance monthly. The "rewards" are just icing on the cake.

Re: Credit Versus Debit- Which Offers Greater Rewards?

Kim_Mango's picture

For years I have used my credit card specifically with the intention of getting frequent flier miles.  I have been able to travel free a couple times a year because of this.

Although I pay $60 for an annual fee, that is the only charge I ever receive from the credit card company because I pay the balance off every month.  Sometimes, I pay it off a couple times a month online just to be on the safe side.  I would guess that my two airfares run roughly $300 each which feels like I'm saving $600 - $60 annual fee =  $540 per year.

I recently started moonlighting for a company called Mango Money which is a prepaid debit MasterCard.  It doesn't have any frequent purchase perks but what it does help me do is stay on budget.  I find that when using a credit card I sometimes blow more money than I had intended. 

All my best,






Re: Credit Versus Debit- Which Offers Greater Rewards?

I have both DC and CC, but seldom use my DC at all for consumer purchases. We buy everything using our CC. We get casback bonuses (with CC) each month which total about $300-400 annually. I believe that our DC also has some kind of rebate/bonus system, but not sure what it is. I do not believe it would be as much as our CC, nor would we get 30-60 days to actually pay for the purchases.

Re: Credit Versus Debit- Which Offers Greater Rewards?

This article is spot on in suggesting that debit cards typically don't offer nearly the level of rewards that many credit cards offer.  However, that is about to change.
I work for PerkStreet Financial and next month we'll be introducing an online checking account that offers more debit card rewards than many credit cards - and over 10x what what the average debit card offers.  We believe that people who spend responsibly on a debit card - and avoid revolving credit card debt - should be rewarded.
Laurie McLachlan