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Debit or Credit? Which Payment Method Will You Choose For Holiday Shopping?

Updated on May 1st, 2023

People spend for any holiday; Cinco de Mayo, St. Patrick’s Day, or the December Holidays. These winter holiday shoppers often start well in advance of the season with research and purchases. Others, though, wait to the last minute.  Now that you have an idea of what you are most likely going to buy this holiday season, it’s time to decide how you are going to pay for it all. Some prefer to not carry a debt after the holiday season so they will rely on debit cards. Others want to spread out the expense so those holiday shoppers will use a credit card. Will it be holiday shopping by debit or credit card?

The Case for Credit Cards For Holiday Shopping

There are some very valid reasons for considering your credit card as your primary payment method for holiday shopping.

The first reason is that credit cards offer great fraud protection than a debit card. Typically, a credit card company will immediately issue a refund while it investigates any unapproved charges.The Fair Credit Billing Act states that credit card companies must offer complete protection to its card users. This is what is known as zero-fraud liability. It is offered more often on credit cards than debit cards.

The second reason for using your credit card this season provides a similar advantage. If you have purchased something online and it turns out it’s not what you imagined it to be or it’s the wrong size and want to return it, credit cards are speedier with returning the money to you. Credit card companies have what’s known as dispute resolution. This features protects you financially while a claim related to your return and request for refund is investigated.

Also, perks come with these payment methods. The perks include cash back rewards or points that accumulate with each dollar you spend. Later, the points can be used to collect gift cards, products, or a credit on your card statement.

Lastly, using your credit card over the holiday season is an excellent way to build your credit score. It shows lenders that you know how to use credit responsibly and are not late or delinquent. Frequent use and payoff can incrementally raise your credit score. Then, you can increase your borrowing power.

Debit Cards Work for Holiday Shopping, Too

Debit cards most likely will hold you to a certain budget. These cards are tied to your checking account, which only has so much money in it. Part of that available money is designated for bills and other necessary expenses that you can’t spend. This can save you from the shock of a large bill after the holidays. Then, you won’t struggle with how to repay it over the next few months. Debit cards do not come with fees like credit cards. This provides additional savings over time.

Debit cards actually come with many of the aforementioned benefits. These benefits include extra security like a chip just like many credit cards. Certain banks have already transitioned to the new higher security debit cards to protect you from potential fraud or identity theft.

Since many merchants pay considerably more in processing fees related to credit cards, they may offer you some additional perks or discounts if you use your debit card instead. It’s worth asking the merchant if they are willing to do you any deals if you use your debit card. In this way, a debit card can have more buying power than a credit card.

You may also save money on your banking fees, depending on which bank you are with, because some banks will waive monthly checking account fees if you make a certain amount of debit purchases each month.

Holiday Shopping Tips

Whatever payment method you opt for this holiday season, be sure to remember that it’s not necessary to go crazy on gift giving and overspend yourself into a financial dilemma. Create a budget for each person on a list based on your total budget that has been allotted to holiday gifts and stick with it.

Remember that the holidays are not about how much money you spend on the gifts you buy. Instead, it is a time to enjoy family and reflect on another year gone by as you prepare for the new one just around the corner.

During the holidays and throughout the year, monitor your accounts (debit and credit) daily to stay on top of your balance and quickly spot any suspicious activity. Do not share your personal credit or debit information with anyone and focus on those shops that have online shops with extra security features.

Finally, pay your balance off each month to avoid paying interest or any other fees.



Peter Daisyme

Peter Daisyme

Peter Daisyme is the co-founder of Palo Alto, California-based Hostt, specializing in helping businesses with hosting their website for free, for life. Previously he was the co-founder of Pixloo, a company that helped people sell their homes online, that was acquired in 2012.

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