Debit or Credit: Which is Better?

Let’s answer three questions to determine if it’s better to use a debit card or a credit card.

Q1: Which card reports to the credit bureaus and builds your credit profile?

Answer: A debit card does not report to the credit bureaus and does NOTHING to contribute to your credit profile or your credit score. How could it? It’s not credit. Credit is about how you handle an advance of money in the form of credit. Debit is not that. It is auto-withdraw from your bank account.

Q2: Which card maintains your privacy when you apply for a home loan?

Answer: As a mortgage broker since 1998, I have seen a lot of bank statements of people who want to qualify to purchase a home. Those bank statements from people who use debit look horrible! The underwriter can see every tiny purchase they make. Their bank statements go on for pages and pages.

There is no privacy whatsoever for all their lattes, fast food, clothing, impulse purchases, restaurants, casino visits, and so on. With a credit card, all the purchases for the month show on one simple line called “Visa.” What they bought is private. It looks good. 

Q3: Which card can boost your credit score?

Only credit card usage contributes to your credit score. Debit is not part of your profile or your score.

I see no reason to use a debit card. Personally, I don’t own one. If you love debit over credit, I would be interested in hearing why. Please click Comment and let me know your thoughts.

Thank you for reading and sharing this information with others who could benefit.