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September 01, 2021

The best method of payment: debit or credit?

Since the dawn of time, man has been riddled with many divisive predicaments.

Good or evil. Paper or plastic. Hero Tabs or ExtenZe.

Yet no quandary has plagued the realm of consumerism quite like this: debit or credit?

And with the news debit card use surpassed credit card transactions in the U.S. last year for the first time, now seems as good a time as ever to find just where we stand on the two north of the border.

Before we officially ask which everyone prefers, let’s address some of the pros and cons of each method:

Credit cards, of course, are the more liberating way to pay.

They promote easy lending (interest-free often up to a month) which is a great tool for many. Spend without discipline, though, and that $19.99 DVD easily becomes a 50 dollar purchase.

Debit cards offer a more conservative approach. Their use encourages you to spend what you actually have – call this the anti-Michael Jackson way.

But what was once the debit card’s greatest asset (the “Insuff. Funds” alert, while embarrassing, never allowed you to spend your way into debt) has disintegrated into a game of how-close-am-I-to-zero?, perhaps more dangerous than spending over your credit card limit.

Many banks now carry insanely inflated overdraft charges (some crazy banks in the States now even ding you $35 per purchase in the overdraft) that can be subject to higher interest rates at the end of the month than your 18%-or-so Visa penalty. 

USA Today recently took the debit vs. credit debate to task and, quite understandably, never came to a conclusion. In fact, the only advice it offered was that cash was the best, string-free method of payment.

Yet, who wants to carry cash in 2009? It’s inconvenient by many philosophies, and when you do actually have it, it’s often best to keep it stashed in your wallet for situations (like riding public transit or splitting a tab at a restaurant) where electronic payments aren’t the most convenient.

So, under that premise, we ask: which method do you swear by, debit or credit? Or is a mix of the two the best approach?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...