9 Reasons to Use a Debit Card Instead of a Credit Card

Debit or credit -- rarely do we give the choice a second thought. These plastic cards look and operate similarly; compare them side by side and your credit card might seem like the better choice, especially when it comes to identity theft protection, credit building and earning rewards.

However, there are instances when it's better to give your debit card a swipe. The next time you've got your wallet in hand, consider some of these reasons to choose debit over credit.

1. You're in credit card debt. Around 12 percent of Americans say paying off credit cards is their biggest financial challenge, according to the GOBankingRates 2015 Life + Money Survey of over 10,000 adults. It gets worse if you're behind on payments; cardholders who have outstanding, unpaid balances have penalty interest rates to contend with, fees levied against them and a harder time paying down their debt as interest accrues.

Debit cards, however, incur no interest and deduct charges as you go, rather than gathering high balances. They can also keep you on budget, too, since a checking account balance is a harder spending limit than a credit card maximum. If credit card debt is a problem for you, it might be a good idea to use your debit card exclusively until you get a better handle on your finances.

2. You can get perks for paying with debit. Rewards aren't exclusive to credit cards; many merchants and retailers offer incentives to customers who pay with debit. Credit card issuers charge processing fees to merchants, and some retailers are willing to give you a deal if you help them avoid such fees by paying with debit. For example, many gas stations advertise a discounted price for customers paying with cash or debit.

Several major banks and credit unions are also on board with their own debit card rewards programs. These give cardholders the chance to earn points and get perks like they would with a credit card, but without heading for debt.

3. You'll avoid unnecessary fees. Many banks waive monthly checking fees for account holders who make a certain amount of debit purchases each month. Wells Fargo's Everyday Checking account, for instance, carries a $10 monthly fee that the bank waives with 10 or more debit purchases each month. Favoring your credit card too much could mean you forfeit an opportunity to avoid this fee.

4. You want to save time. Most debit card payments register immediately, so there are fewer delays than with credit cards and their pending "float periods," which usually last at least 24 hours. If you need to get money to your payee immediately, choose debit.

Debit cards also provide easy access to cash through a teller or ATM. Additionally, debit card numbers are often required to use online and mobile peer-to-peer payment services, such as PayPal, Venmo or Square Cash, that link straight to your checking account.

5. You can get better foreign exchange rates. Credit cards are often a popular choice for travel because of their added anti-fraud protections. But you might end up paying higher foreign exchange rates for direct purchases and transactions in a foreign country.

While traveling abroad, using your debit card can help you get the best foreign currency exchange rates. If you withdraw currency at an ATM with a debit card, you're more likely to get a wholesale exchange rate and get more foreign currency for your U.S. dollars. Some banks charge an international ATM fee, however, so check your bank's fee schedule to make sure you won't get charged more than you're saving.

6. You'll pay less on taxes. We'd all love to find a way to get a reprieve on our taxes -- it's undoubtedly a reason that 1 in 4 Americans think about money more than anything else, according to the 2015 Life + Money Survey. Paying your taxes with debit instead of credit is one way to lower your tax bill. The IRS, state and local governments are authorized to charge you a credit card convenience fee, which is generally 2 percent of the payment. But use a debit card to pay, and there's a flat $2 to $4 fee depending on how much you owe.

7. You might get a break from utility companies. Electric, gas, water and trash pickup costs can strain anyone's budget. Thankfully, using your debit card to pay your monthly utility bills can lessen their financial impact. Like with the convenience fee on tax bills, several utility providers are allowed to levy extra fees on customers for paying with their credit cards. Use your debit card instead to help minimize these costs and pay lower fees.

8. You're interested in earning interest. With a credit card, it's about the interest you pay. With a debit card, you instead get the opportunity to earn interest. Many banks and credit unions offer customers and members a range of interest-bearing checking accounts, with annual percentage yields that accrue dividends as you go about your banking business (like using your debit card). Earning some extra interest just for having money in your account is good compensation for debit's lack of credit-building power.

9. You want convenience. Simply put, a debit card can offer flexibility and convenience that credit cards won't. A debit card gives account holders the option to carry cash or not. It also eliminates the hassle of keeping a checkbook on hand, which has the added benefit of keeping your account number out of the wrong hands should your wallet or purse get lost or stolen. And when you do need an alternative form of payment, like a money order, most merchants or financial institutions only accept debit as payment -- not credit.

Paul Sisolak writes for GoBankingRates.com, a source for the interest rates on savings accounts, CDs, mortgages, auto loans and more.