Always Use Credit Cards Over Debit

Credit Card Article Image

Why choose only credit cards? Well, in today’s world with increased identity theft and surging prices for goods and services it only makes sense to use only credit cards versus debit.


We all know how easy it is to rack up large and unstable levels of debt using credit cards, so what I am advocating for is tactical and precise usage, so much so that you will be able to eliminate even carrying a debit card in your purse or wallet.

Choosing the right credit card

Not all credit cards are created equal and yes ultimately your credit score will affect the effectiveness of the following plan for maximized savings. If you do not have a recent credit score available then you can check your rating online through sites like CreditKarma.com or Mint.com. Generally, if your score is above 700 then you should qualify for one of the following cards:

Reward Categories

American Express Blue Cash Preferred

Discover it Card

Bank of America BankAmericard Cash Rewards

Chase Sapphire Preferred Card

Annual Fee

Yes, $75

No

No

Yes, $95
($0 first year)

Groceries

6%

5%
(if in quarterly rotation)

2%

1 point per $1 spent

Gasoline

3%

5%
(if in quarterly rotation)

3%

2 point per $1 spent

Travel

1%

5%
(if in quarterly rotation)

1%

2 point per $1 spent

Restaurants

1%

5%
(if in quarterly rotation)

1%

2 point per $1 spent

All Other

1%

1%

1%

1 point per $1 spent

Sign-Up Bonus

$150 statement credit after $1,000 spend in the first 3 months

Doubled cash back at the end of the first year for new cardmembers

$100 cash rewards after $500 spend in first 90 days

50,000 bonus points when you spend $4,000 in the first 3 month


Depending on your spending habits one of these credit cards should work for you. For example someone who is a frequent traveler would best be served by the Chase Sapphire Preferred Card, while someone who spends a large chunk of their budget at grocery store would preferably select the American Express Blue Cash Preferred Card instead.

Why Should I Only Use Credit Cards?

There are two answers to this question, first, by NEVER using debit cards unless you absolutely have to significantly reduces your exposure to identity theft. Ask yourself a question, would you rather have a debit or a credit card stolen? The theft of debit card funds require a signed affidavit to get your money back while credit cards are generally handled with a phone call to your provider.

The second reason for only using credit cards are the targeted rewards. Let’s take for example the card I prefer, the American Express Blue Cash-Back Preferred. This card comes in two options depending on your credit rating, the more desirable version features a generous 6% on grocery purchases up to $6000 a year spent. If you have read our other post “Stop spending $4,000 on groceries. Save 15% or more!” than you know that this limit should be a comfortable ceiling for the average consumer. This credit card also features 3% cash-back at select department stores and more importantly gasoline fill-ups. According to the U.S. Energy Information Administration the average US consumer spends approximately $1,962 per year, per vehicle. Using these two metrics as a benchmark for potential savings, we can expect a minimum cash-back reward of:

Total Savings Potential
(per person)

Total Savings Potential
(average family of 4)

Total: $223.86

Total: $477.72

Grocery Savings: $240
(after $4,000 spend)

Grocery Savings: $360
(after $6,000 spend)

Gas Savings: $58.86
(1 car after $1962 spend)

Gas Savings: $117.72
(2 cars after $1962 spend per)

Annual Fee:
-$75

Annual Fee:
-$75

Here is the list of department stores that the American Express Blue Cash Preferred offers at 3% cash-back at:

• Bealls
• Belk
• Bloomingdale’s
• Bon Ton Stores
• Boscov’s
• Century 21 Department Stores
• Dillard’s
• J.C. Penney (JCP)
• Kohl’s
• Lord & Taylor
• Macy’s
• Neiman Marcus
• Nordstrom
• Saks Fifth Avenue
• Sears
• Stein Mart
These savings are not included in the above table so consider them an added bonus if you shop at any of them.

Need more reasons to only use credit cards?

In addition to the security benefits and cash-back rewards, using credit cards for all purchases will help strengthen your credit score, barring you are not banging up against your limit each month. Additionally, a little known tip, if your grocery store sells gift cards to merchants like Amazon you can double down on your savings for boxed goods through their Subscribe & Save program (see the previous post mentioned earlier). The total savings rate when using this tip is around 21% or more after everything is calculated!


Please Don’t Forget!

Keep in mind the credit cards only spending technique requires a strict budget discipline. These practices work best when you pay-off account balances at the end of each billing cycle. Carrying interest barring balances over billing cycles can quickly eat away at any rewards. Finally, remember to maximize your savings by using the right card for the right purchase type, groceries, gas, travel, office supplies, restaurant meals etc.

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