5 Debit Card Myths You Need to Stop Believing Now

Your debit card is a pretty simple piece of plastic. Swipe it, chip it, complete your transaction, and build your credit without any fees whatsoever.

Wait a second – not so fast. Like many money myths, it turns out there are some misconceptions about your trusty debit card. And, we’re all guilty of falling for these misnomers from time to time.

So, without further ado, here are some common debit card myths you need to start dispelling right now.

Myth #1: Debit cards are better than credit cards for building your credit score.

Debit cards do not affect your credit score. Repeat: Debit cards do not affect your credit score.

So why does this myth still exist? Maybe it’s because debit cards and credit cards are both plastic and look almost identical? Perhaps because they are often used interchangeably, you think they have the same influence on your FICO digits?

Regardless of why you may think debit cards help your credit score, it’s time to put this myth to bed for good. “(Just because your debit card) has a Visa or MasterCard logo on it, doesn’t mean it is reporting to the bureaus like a credit card would,” says Jennifer Beeston of Guaranteed Rate Mortgage. “Wrong, wrong, wrong.”

Arianna Nunez of website TopCashback.com further explains. “Credit scores are numbers which represent how well you manage a line of credit over your borrowing history. Therefore, to build a credit score, you must borrow money and learn to pay off debt,” says Nunez.

“Debit cards don’t have a line of credit since they automatically release the funds from your checking account,” she says.

In other words, any financial transaction that has to do with borrowing and repaying money – like a loan for a car or home, or spending on your credit card – can either help or harm your credit score. Why? Because this demonstrates how well you handle credit. Your debit card, on the other hand, does not serve the same function and your debit card spending isn’t attached to a creditor. Instead, when you use your debit card, this is akin to spending your own money.

Myth #2: Debit cards don’t offer rewards.

While debit cards may not build credit, you can still earn rewards when you use these handy plastic cards. Debit cards and rewards, you say? That’s right. In some cases, debit card rewards even rival popular credit cards rewards.

“Another myth concerning debit cards and checking accounts, in general, is that neither have offerings which come with reward programs,” says David Bakke of MoneyCrashers.com. “That’s just not true.”

One reason why debit cards aren’t readily associated with rewards is because there aren’t as many reward programs as there are with credit cards. But, says Bakke, a bit of Internet research can lead you in the right direction, to the right card, and to the best rewards.

Myth #3: Debit cards are safer to use than credit cards.

Scams, fraud and identity theft often get lumped into the world of credit cards. While that’s certainly correct, it also tends to go hand-in-hand with the myth that your debit card is somehow safer, a veritable fool-proof fortress to would-be hackers.

Unfortunately, it’s only until after your money’s been stolen that the thought of “maybe my debit card isn’t immune to theft” comes to mind. Advancements in banking security certainly make debit cards safer, but here’s the thing: They actually have fewer consumer protections than your average credit card.

“If a thief steals your debit card info and uses it to buy something, and you wait too long to report it, you could be on the hook for $500 (if you wait between two and 60 days) and the total amount stolen (if you wait more than 60 days),” says Sarah Hollenbeck of Offers.com.

However, under the regulatory Fair Credit Billing Act (FCBA), your liability with a credit card – under the same circumstances – is capped off at $50. This amounts to one-tenth of the responsibility you’d have with a debit card. Why the difference?

“When fraudulent activity occurs on your credit card, no money leaves your bank account, which is not the case with debit card fraud,” says Nunez of TopCashback.com. “Using your debit card has more risks and less protection than most people think.”

Myth #4: Debit cards are free of fees.

Credit cards come with their fair share of fees for late payments, balance transfers, foreign transactions, and cash advances. And let’s not forget about penalty interest, arguably the worst fee of all. To boot, you may also have to pay an annual fee just for having the card in your wallet.

Debit cards, by contrast, get a shining reputation as the card with no fees – mainly because they don’t offer the same services as credit cards. You might want to think again.

While it’s true that debit cards don’t have those fees, they are not fee-free. In fact, your debit card is linked to your checking account, and as such, it’ll carry the same associated fees.

“Most debit cards have basic fees such as overdraft, service, daily balance and ATM fees,” says Nunez.

You can, however, avoid bank fees by being aware of them first and checking the terms and conditions of your checking account. Oftentimes, you can ask your bank to waive fees either temporarily or permanently. If your bank won’t oblige, you can also switch to a fee-free bank account that offers an associated debit card that is – you guessed it – fee-free.

Myth #5: It’s against the law if you don’t have an EMV chip debit card.

Imagine going to the store, and at the point of sale, being asked to insert your chip into the card reader. Your mag-stripe card is the only one that holds a spot in your wallet, so instead, you swipe it, and next thing you know, alarm bells go off, the authorities are summoned, and you’re carted off in the paddywagon. Huh? This hypothetical situation all came about because some folks think they need to use an EMV chip card instead of their mag swipe card.

We left this one last simply because it’s the most ridiculous debit card myth around. The simple myth-busting answer is that merchants don’t care what kind of debit card you have, as long as you can pay them with it. The government doesn’t care either.

At the same time, banks, payment processors and merchants are pushing to migrate from magnetic to EMV cards and this is often why people think they have to have an EMV debit card. To the contrary, if you don’t have a chip card yet, don’t worry. The shift has been slow coming in the U.S. and you can still use your swipe card with zero penalties – or jail time.

Don’t doubt your debit

They say there’s a little bit of truth in every lie, and myths are the same way. They are easy to believe because they often sound true.

But, by understanding the truth about your debit card, you can better manage your money, spend responsibly and learn about some of the features, perks, and quirks that your debit card offers. Lastly, you can give your debit the credit it deserves – without confusing it for credit.

 

Here’s How to Find the Best Debit Card and Savings Account

If you’re looking to open an account with a new bank, you may also be on the hunt for the best debit card and savings account. Yet, with so many different options to choose from, it can be difficult to pick the best one for you.

This is why it’s so important to do your due diligence and understand what’s important to you in a bank account. To help you find the perfect match, here are 6 factors to consider when choosing a new debit card and savings account.

1. No Monthly Fees

Did you know that Americans pay $329 in bank fees each year on average? Just imagine what you could do with an extra $329 in your bank account this year.

When you begin searching for a bank account, fees are one of the first things to consider. Many banks will charge monthly service fees that can range anywhere from $2 to $10. Some will even charge you a fee for inactivity. It is possible to avoid many of these charges by setting up direct deposit or by keeping a certain amount in your account. On the other hand: why would you bother with this when you can find a bank with no hidden fees – ever.

Chime doesn’t pass along any hidden bank fees. That’s right. With a Chime bank account, you won’t have monthly minimums, foreign transaction fees, or overdraft charges.

2. Using Your Debit Card to Build Wealth

The easiest way to grow your savings is by making it automatic. With Chime’s Automatic Savings program, each time you use your Chime Visa® debit card to make a purchase or pay a bill, Chime will round up that amount to the nearest dollar. The difference will then be transferred from your Spending account to your Savings account.

Want to boost your savings even further? Set up an automatic transfer each time you get paid. Whether you are saving up for a family vacation, your dream wedding, or something else, Automatic Savings can get you there faster.

3. Liquidity is a Must

Emergencies can pop up at any time. For example, perhaps your car breaks down or your furnace doesn’t work on a cold night. Because you probably don’t keep a large balance in your checking account and other assets might be tied up, it’s important to have a liquid emergency fund. With that said, getting money out of an ATM fee-free or transferring money quickly from savings to checking are also important factors. The bottom line: be prepared for the worst by having a cash cushion available and accessible.

4. Security Matters

It seems like data breaches are becoming more frequent and severe. Some bank accounts, like Chime, take security seriously. The Chime app, for example, supports Apple’s Touch ID iOS security, making it much more difficult for someone else to access your account. In fact, instead of using a passcode to access your savings account, you can set up your account to recognize only your fingerprint.

5. Ability to Deposit Checks On The Go

There was a time when it was nearly impossible to avoid making a trip into a bank branch to accomplish your banking needs. Today, you can hop on an app and do just about everything, including depositing a check with a couple swipes on your smartphone. Luckily, a large percentage of banking institutions now offer this service to their customers.

6. P2P Fund Transfers

When you have a night out with friends it can be difficult to split up the bill. That’s why having a peer-to-peer (P2P) feature with your bank account is important.  Chime, for example, offers its Pay Friends feature. You can simply search for your friends that use Chime, enter the payment amount, and click submit. When the funds are available in their account, they will receive an alert.

Final Word

All of us make financial decisions on a daily basis. One of the biggest decisions comes down to where you choose to park your money. While the features mentioned here are important, you’ll ultimately want to choose a savings and debit card provider that you feel comfortable with. You also likely want to find a bank that will help you grow your savings and reach your money goals faster.

 

This is How Debit Cards and Savings Accounts Can Work Together

How often do you use your debit card? If you’re like most people, the answer is every day.

It’s a quick way to access your money to pay for small purchases like your morning latte, a grocery run, or gas at the pump. A debit card typically draws cash right from your checking account, and paying with this card is like writing a virtual check.

For the most part, debit card transactions are uneven dollar amounts. For example, your coffee may cost $3.69, a tank of gas totals something like $28.44, and groceries may tally up to $35.67. Back in the days of writing checks, many people spent hours balancing checkbooks to make sure all those pennies added up correctly. Now, with all the math done automatically, we often don’t pay attention to those uneven dollar amounts.

But, here’s a good reason to pay attention to your small change: It can actually help grow your savings account. That’s right. Believe it or not, your debit card transactions can help you save money and beef up your emergency fund. Read on to learn more.

Grow Your Savings Every Time You Spend

There are quite a few bank account programs out there, such as Chime’s Automatic Savings feature, that help you grow your net worth without ever thinking about it. The concept is simple: when you make a purchase with your debit card or pay a bill, the amount is rounded up and that change is moved into your savings account.

Suppose your spending throughout the day looks like this:

  • Morning Latte: $3.69
  • Lunch: $8.25
  • Gas: $28.44

Each transaction made with your Chime Visa debit card would then be rounded up to the nearest dollar. The result would be that you spend $4.00, $9.00, and $29.00 with $0.31, $0.75, and $0.56 going directly into your savings account. That extra $1.62 doesn’t sound like much, but small daily amounts like this can certainly add up over time. After a year, for example, your savings account may have an extra $600 in it.

Are you going to get rich with a program like this? Probably not. But it may mean you don’t have to struggle to figure out how you’re going to pay for those unexpected mechanic expenses. Not only that, but you may sleep more soundly knowing your savings is there to back you up.

Build Wealth by Spending

In order to build wealth, you should have money going into your savings account regularly, and coming out rarely. Unfortunately, most of us lack the discipline to move money into our savings accounts on a regular basis. Instead, we often opt to spend it. With an automatic savings program, however, you can boost your savings without even realizing it.

A round-up program, however, doesn’t take the place of regular and intentional saving. Whereas $600 or so every year is a good start, this may not be enough for you, especially if you’re trying to build an emergency fund that will support you during prolonged and rough times.

For this reason, you should also continue to regularly contribute to your savings. And, to make this easier, you can look for programs that help you get a jump start on building wealth faster. Chime, for example, has a feature that allows you to automatically transfer 10% of each paycheck into your savings account. If you do this – while still counting on your round-up pennies – you’ll be well on your way to meeting your savings goals.

 

What is an EMV Chip Card and How Secure are They?

When was the last time you actually swiped the stripe on your credit or debit card during a transaction? If it’s been a year or so, the timing sounds right.

Over the past 12 months, there’s been a huge technological shift from mag-stripe cards to those enabled with chips. In fact, chip-enabled cards represent more than 600 million cards in the U.S. alone. In spite of retailers in the U.S. being slow to embrace the new technology (in Europe and other parts of the world, retailers have by and large already adopted chip cards), you’ve likely seen merchants upgrading or replacing payment terminals to accept chip cards. While this takes place, magnetic stripes will continue to go the way of the dodo. Even if your old card hasn’t expired yet, your bank has probably already provided you with a chip-based replacement.

This migration to chips cards, also known in the industry as EMV (Europay, MasterCard, Visa) credit cards, is accompanied by a swirl of hype. For example, EMV providers commonly state that your transactions are more secure, resistant to hackers, and foolproof to fraud. About now you may be wondering: How does that little microchip inside your card provide you with these safety measures?

Read on to learn more about the EMV cards and how you can protect your money.

A primer on card technology

Magnetic stripe technology is actually quite archaic. It dates back about 50 years and utilizes the same analog format as an old cassette tape. It’s literally magnetized and matched to your bank account information. This data, embedded on a simple mag stripe, is consistent and therefore never changes.

So, anytime you go to swipe a stripe-equipped card, it reads the same data over and over again. And this consistent information is vulnerable to fraudulent activity because thieves can decode the magnetic field and duplicate your bank information. In fact, fraudsters commonly use credit card skimmers at ATMs and other locations to glean your personal information. Stopping fraud meant canceling your old card and getting a new one with new information. Unfortunately, your new card included the same stripe technology and it was therefore just as sensitive to theft as it was before.

By contrast, the computer chip on an EMV card is where your banking information is stored, and the chip is always changing up the data on your card. For example, you may have a card number that stays the same, but the information embedded on the chip is constantly being scrambled and encrypted. In short, your card’s chip contains a special microprocessor that creates a code for every transaction, no matter the amount.

So, when you insert your card into a physical payment terminal or when you’re shopping online, the computer chip communicates with the merchant and unscrambles the coded language. Your  payment information is then obtained using one of a few different types of authentication methods:

  • Static Data Authentication (SDA)
  • Dynamic Data Authentication (DDA)
  • Combined DDA with application cryptogram generation (CDA)

The EMV chip also ensures that both the transaction and the cardholder are verifiable (before the days of EMV cards, you’d accomplish this by entering your PIN number and card’s security code).

Essentially, your EMV card contains the exact same information as your old mag stripe card, but because the chip inside is always generating new coded information, it has an extra layer of protection that magnetic stripe technology fails to offer.

For example, if a thief gets his hands on your EMV card, he will have a tough time using it. Not only is it difficult to obtain the computer chip from your card (equipment to do this can cost upwards of $1 million), but the advanced encryption would make it nearly impossible to decipher your banking information. Even if your card number was stolen, and not your actual card, the would-be fraudster wouldn’t be able to use it because EMV chip technology prevents the number from being replicated and repeated. On top of this, a payment terminal won’t recognize the number and the transaction will be declined.

Follow these EMV chip safety tips

Although EMV technology makes banking more secure, identity thieves have become more sophisticated and will always try to find ways to access your money. Your Chime debit card, for instance, is chip-enabled, but you should still take precautions to protect your finances, pay safely and avoid getting scammed. Take a look at some ways to keep your money safe:

  • Guard your digits: At an ATM, the supermarket, the mall, or when using your laptop in a public space, never divulge your card or PIN numbers to anyone. Fraud can still occur, so if possible, opt to sign for a transaction instead of using your PIN. If a fake transaction occurs, the liability falls back on the issuing bank, or on the merchant if the business is not equipped to handle EMV transactions. Some cards have even done away with PIN numbers and employ a chip plus signature method. (Neither Chime or another bank will ever ask you to reveal your PIN number.)
  • Keep track of your bank statements: Banks are more vigilant today to stopping theft and may even intercept fraudulent activity before it happens. My bank, for example, recently notified me that there was an attempted unauthorized use of my debit card – before a transaction was made. But, thanks to my EMV card, the fraudster couldn’t use my card number, and the bank recognized that I wasn’t the one using the card. The moral here: Stay on top of your monthly bank statements and look for transactions, debits or withdrawals that don’t look familiar. If you spot anything suspicious, report it to your financial institution.
  • Opt for mobile payments: Chime’s spending and automatic savings accounts are just two ways to maximize your mobile banking experience without the need to use a physical debit card. To ensure your safety, you can also look for retailers and vendors with mobile payment technology as this lowers the risk of your information being captured. Adding your debit and credit cards to your phone and using mobile-enabled terminals can also help ensure a secure shopping experience.
 

Debit vs. Credit: Which One is Better for Saving Money?

If you’re struggling to save money, you’re not alone. According to a National Foundation for Credit Counseling study, 32% of Americans don’t have any short-term savings.

Before figuring out ways to save extra cash, you might want to first think about how you currently spend and pay for things. That’s right. Take a look at how debit and credit cards stack up against each other when it comes to saving money. This is an in-depth breakdown of debit vs. credit cards.

Spending power of the debit card vs credit card

As you can imagine, how much you save depends largely on how much you spend. The main difference between debit and credit cards is how much spending power you have.

With a debit card, for example, you can usually only spend what you have in the account. In some cases, though, you can spend more with overdraft protection. But, this isn’t recommended because banks charge an average overdraft fee of $33.07. To avoid this situation altogether, you can opt out of overdraft protection with your bank.

With credit cards, you can spend up to your credit limit, whether or not you have the money in your bank account to pay it off immediately. If you have a very low spending limit, you might not have issues paying off your balance in full. The higher the credit limit, though, the more tempted you’ll be to overspend.

Winner: Debit cards

Cashback with credit and debit cards

If you’re not saving enough on your own, one source of extra cash may be cash-back rewards you get from using your debit or credit card. The one problem with this is that not many banks offer debit card rewards programs. Most cash-back rewards programs are with credit cards.

Some credit cards offer up to 2.5% cash back. So, if you spend $2,000 every month on your credit card, that’s $50 you can withdraw and put in your savings account — or $600 per year.

Winner: Credit cards

Automatic savings linked to debit and credit cards

A debit card is tied directly to your checking account. This means that if you have a savings account with the same bank, you can easily set up automatic transfers from your checking to your savings accounts.

Some bank accounts even help you save money by using your debit card. For example, Chime will round up each transaction made with the Chime Visa® Debit Card to the nearest dollar and automatically transfer the roundup amount from your Chime Spending account to your Chime Savings account.

If you use your Chime Visa® Debit Card an average of twice a day, you could have almost $400 extra in savings after a year!

Winner: Debit cards

Debt

One of the biggest threats to your mission to save money might be your need to pay off debt. When you pay back debt, your monthly payment is going to your creditor instead of your savings account. What’s more, interest payments eat up even more of the money that you could be socking away into your savings – if only you didn’t have the debt to pay back.

Luckily, debt isn’t something you have to worry about with debit cards unless you’re consistently overdrafting on your checking account. With a credit card, however, you could get into debt if you’re not paying your balance in full each month. The longer this happens, the more debt builds up. And, since credit cards charge an average interest rate of 16.14%, that interest will add up fast.

Winner: Debit cards

It all depends on your financial habits

All things considered, debit cards do a better job of helping you save than credit cards. But that doesn’t mean they’re the best option for everyone. Your spending and saving habits are the most important factor in this debate.

For example, if you’re a big spender without a budget, you’d be better off with a debit card, which will restrict you to spending only what you have and keep you out of debt. Chime’s Automatic Savings Program is also a must-have if you struggle to save on your own.

However, if you already have good money habits, a credit card might be a good way to go. Remember that the rewards from a cash-back credit card can supplement the savings you already have.

Is a debit card right for you?

To find out which option, credit vs. debit, is best for you, take a step back and think about your financial habits. Be honest with yourself and consider how each payment method fits your savings goals. The good news: you’re not stuck with your decision. So, if you try it for a while and it’s not working out, you can always switch.

 

When to Choose a Debit vs. Credit Cards

With many young consumers opting for debit vs. credit, credit card enthusiasts are quick to point out what they’re missing in terms of perks like miles and even cash back. However, there’s no right answer when it comes to which type of plastic you should use. The important thing is that you understand the pros and cons of both.

Debit vs. Credit: How They Compare

The best choice for you likely depends on what you want to use your card for. Take a look at our winners for the following benefits, fees, and uses.

Fraud protection

Both debit and credit cards offer zero-liability protection on fraudulent purchases. But the process of getting your money back differs depending on the type of card you use. According to the Fair Credit Billing Act, the maximum amount you may lose on an unauthorized credit card charge is $50, and the investigation will likely be over by the time your statement balance is due. However, under the Electronic Funds Transfer Act, your potential loss on a debit card may be as much as $500 if you report the fraud more than two days after it took place. What’s more, the bank may not restore that cash to your account immediately. If you need that money now, you’ll be at the mercy of the bank. In both cases, you’re not responsible for any amount of the unauthorized transaction if you report the card missing before any fraudulent purchases take place. Winner: Credit cards

Spending control

The winner on this one is fairly obvious. Because debit cards are linked to a checking account instead of a line of credit, the only way to go into debt with this type of card is to overdraw your account. And you can avoid this by opting out of overdraft protection. It’s possible to use credit cards without going into debt, but people who pay off their balances in full each month may be in the minority. According to a 2016 NerdWallet study, households with credit card debt owe $16,748 on average. All things considered, it’s easier to overspend with credit cards than with debit cards. Winner: Debit cards

Rewards

Rewards are a common feature for credit cards. It can be difficult to find a debit card with a good rewards program. According to Elan Financial Services, just 17 out of the top 25 financial institutions offer a debit rewards program. Even then, credit cards offer big profits for banks, so they’re more competitive in offering rewards to entice people to use their cards more often. As such, you’ll likely find better rewards and big sign-up bonuses with credit cards. Winner: Credit cards

Fees

When applying for a credit card, it’s a smart idea to review the cards rates and fees as part of your application submission. When doing so, you’ll notice that most credit cards charge a slew of fees. Late fees, cash advance fees, balance transfer fees and foreign transaction fees are all common among credit cards. Some even charge an annual fee. And that’s all on top of interest charges if you carry a balance. Debit cards, on the other hand, typically don’t come with a lot of fees. In fact, if your checking account charges a monthly fee, you may be able to get the fee waived by using your debit card regularly. Better yet, with the Chime Spending Account and Chime Visa Debit card, you won’t have any fees at all. That’s right – no monthly maintenance fee, no overdraft fee, and no foreign transaction fee. You’ll also pay no ATM fees at over 24,000 MoneyPass ATMs. Winner: Debit cards

The Best Option May Depend on the Purchase

If you have a debit card and a credit card, you may benefit from using both. For example, when you rent a car, stay at a hotel or fuel up your car, it’s best to use a credit card. That’s because the merchant may place funds hold on your card. Depending on the purchase, that could be hundreds of dollars. If you’re using a credit card, funds hold is no skin off your back. But if you’re using a debit card, it means that your money is unavailable to use, which can cause problems if you need it. Also, some credit cards offer benefits on certain purchases. For example, you can often get rental car and other travel insurance coverage to help you save money when you’re on vacation. On the other hand, some merchants charge a fee if you use your credit card. For example, some utility companies may add a percentage of the transaction to your payment. Also, some gas stations may charge you a few more cents per gallon if you use a credit card.

Which Should You Choose?

If you only want one card to use for all your purchases, consider your priorities and the benefits and drawbacks of each card type before you choose one. Debit cards are a good choice if you struggle with overspending or just want to avoid that temptation completely. If you’re not as debt-averse, however, a credit card offers appealing features. Just be sure to pay off the balance in full to avoid interest and try not to use the card at merchants that tack on an added fee.

If you already have both a debit and credit card, the best choice may be to use one for certain purchases and the other for the rest. Review the terms and features of both your cards to determine which to use in different situations. The better you understand the terms and what you need, the more likely you are to find a solution that works for you.

 

This Is Why Millennials Are Choosing Debit Over Credit

In spite of all the perks and offers credit card issuers throw out left and right, millennials tend to use debit cards. In fact, in a 2015 survey, Chime found that 67% of millennials prefer debit cards over credit cards.

So, why are millennials wary of credit cards when older generations usually choose credit over debit? To get to the bottom of this conundrum, you first need to understand the environment in which millennials were raised.

They are children of the Great Recession

Millennials grew up in rocky economic times. When the Great Recession began in late 2007, it rocked consumers. According to the Bureau of Labor Statistics, unemployment rates reached 10% in 2009. The number of job openings decreased by 44% during the recession as a whole.

The uncertainty that came with the Great Recession put young consumers on notice. Things that appeared to be going smoothly before the crisis came crashing down – seemingly overnight for some. And it can happen again.

As a result, millennials tend to seek the security of debit cards, which are tied to accounts that are insured by the FDIC. In their mindset, if the economy tanks again, they won’t have any high-interest credit card debt to pay off.

Millennials are wary of more debt

Many are quick to point to big banks when laying blame for the Great Recession. But unwieldy spending on the part of consumers also contributed to the mess. At the end of 2007, consumer debt reached 127% of disposable income, compared with 77% in 1990.

Knowing that high debt loads can have that kind of impact has turned younger consumers off to borrowing. Rising student debt levels may also contribute to millennials’ aversion to credit. According to Student Loan Hero, 2016 college graduates were shackled with an average of $37,172 in student loans.

Indeed, millennials already feel like they’re drowning in debt. They certainly don’t want to add to this burden.

Federal regulations make credit cards less accessible

For many millennials, credit cards simply weren’t available to them as they were coming of age.

Before the Credit CARD Act of 2009, credit card issuers were handing out credit card applications like candy on campus. In fact, they’d often give out free candy, T-shirts, and other swag to encourage college students to apply.

With the CARD Act, however, credit card issuers were limited in how they could market to young consumers. For example, applicants under 21 must prove they have sufficient independent income or apply with a cosigner. Credit card issuers are also prohibited from offering tangible items to students on campus to encourage them to apply.

Accordingly, students no longer see credit card companies hanging around campus with free stuff. And, because federal regulations make it harder for students to get approved, credit cards aren’t as much a part of college culture as they once were.

Why Using a Debit Card Can Be a Smart Choice

There’s no one-size-fits-all answer to which type of plastic is better. But there are some compelling reasons to choose a debit card for your everyday purchases.

Spending is limited to what you have

Debit cards are tied to your checking account, so there’s no revolving credit line like with credit cards. In most cases, the bank deducts your purchase from your balance immediately, and when the money’s gone, it’s gone. As a result, debit cards are a great option if you have issues with overspending or want to avoid debt.

You can avoid fees

Some credit cards charge annual fees that you can’t waive. What’s more, some merchants, including gas stations and utility companies, may charge an extra fee if you pay with a credit card.

You can often avoid these fees by opting for a debit card instead. Even if you have a checking account that charges a monthly fee, some banks will waive that fee if you use your debit card regularly. There are also online bank accounts that come with debit cards that charge no bank fees at all. Chime, for example, offers no overdraft or monthly fees. Plus, every time you use your debit card, Chime will round up your spending amount and deposit the round-up into your savings account. How’s that for no fees plus extra cash?

You can avoid interest

Because debit cards aren’t tied to a credit line, there’s no interest involved like there is with credit cards. Of course, credit card users can avoid interest by paying their balance in full each month. But for some people, the temptation to pay over time instead can cost them.

You Do You

There are several arguments about which is better: debit or credit. Ultimately, the right choice is the one you make for yourself. For people who can budget and deal with debt responsibly, credit cards may be a good choice. However, you may not fall into this camp.

If you’re like most young consumers who prefer to avoid financial risks altogether, debit cards are the perfect answer.