Why use Debit when you don’t have to?

A couple of experiences lately made me wonder why people use Debit when making large purchases.

I understand some people can’t get credit and this is their only option, but this wasn’t the case in either example. I also understand you can get “PC points” and other Debit “points” when doing this, but it still doesn’t get you much of a “spending reward”

Case 1. Auto Dealership. Person already had the money in their bank account to make a down payment of $11,000 on a car. Used debit. Done. No worries. I actually heard part of the conversation. “How would you like to pay?” “Umm..I guess I’ll use my Visa…no wait…money is in the bank already…I’ll just debit it”

Now, I don’t know what Visa or if she got some “Debit points” from this transaction, but she probably gave up at least a 1% return on whatever credit card she could have used. $110.00 in some credit card reward.

Go home and pay that bill off right away – done.

Again, I understand why people use debit, but this seemed like a case of a missed credit card bonus – whatever it might have been.

Case 2. Dentist. Almost the exact same situation. Person must have had an expensive procedure because the bill was $4400. I don’t know if this was covered by insurance or whatever, but again the person had to pay up front anyway. “I guess I’ll use my Mastercard…no I won’t remember to pay this…better to just debit this today, I’ll get reimbursed by next week”

Again, at least a 1% return for a $44 reward on a credit card.

You should be shooting for better than 1% reward on your card, but at least that is something.

So to add up both cases – $15,400 spent, about $160 in credit card rewards.

That’s nice but you CAN do way better. We did a write up on a great credit card reward a few months ago and it still stands true.

That is getting a 5% return. 5%!!! and it’s easy to do.

So, if those purchases would have used the Starwood Amex, they would have 15,400 Starpoints.

That is 5 free nights in their class 2 hotels! (Sheratons/ 4 Points) Not fancy hotels by any means, but they would go for $100-$150/night.  Good for travel sports/ just spending the night after driving all day/ just a getaway with a pool, etc.

These choices do make a difference.

1. Use debit for no reward

2. Use a grocery/department store credit card for $160 in rewards (or so)

3. Do some research and get a 5% return and cash in on 5 free hotel nights.

A little bit of reading can save you serious travel dollars.

As a side note, I also use the RBC Rewards Visa which offers 50% bonus points to Avios twice a year.

That would be 15,400 RBC points converted to 23,100 Avios.

That is more than enough for 2 flights to New York City from here or 1 flight to Florida. (see our Avios page)

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