Looking for an entertaining holiday game to play with family and friends? Try “This or That.” It’s easy. Simply throw two choices out, then everyone has to say which one they like best and why. I’ll get you started (my answers are in bold):

Gingerbread men or sugar cookies
Tinsel garland or ribbon garland
Candy canes or soft peppermint sticks

That last one was hard. Candy canes and soft peppermint sticks look and taste similar, so I finally had to pick based on how I’d use them. For me, candy canes are better to crush up and put on sugar cookies. For others, though, peppermint sticks are sturdier and better to shore up gingerbread houses. Again, it’s all in how you’d use them.

Now, let’s try a banking edition of the game: debit card or credit card. Like our candy cane and peppermint stick example, they have similarities – both are plastic, have 16-digit card numbers and expiration dates, and both offer convenience – but they have different purposes. Once more, choosing one comes down to how you are going to use it. Knowing when to use a debit card and when to use a credit card can help you maximize the distinct advantages of each one.

To help you understand the differences, let’s review their definitions.

What is a Debit Card?

A debit card lets you make purchases, in person and online, by drawing, or debiting, the money from your checking account. Note: The money is taken directly from your checking account, almost immediately, and it is interest-free.

What is a Credit Card?

A credit card also lets you make purchases, in person and online, but instead of taking money from your checking account, you are borrowing money against a line of credit, and you have a credit limit. Your transactions are reflected on your bill. The card issuer pays for your purchase. When you receive your monthly credit card bill, you then pay the card issuer. Note: Because you are essentially borrowing money, you are charged interest IF you carry a balance over month to month.

Now that we know the basics, let’s talk about the when to use debit and when to use credit.

When Should You Use Debit or Credit?

Both debit and credit cards offer convenience, and both offer distinct advantages in certain situations.

Debit cards are good to use when:

  • You are on a budget. Remember, debit cards remove the money from your checking account almost immediately. This type of real-time payment makes it difficult to spend more than you have. That might be especially helpful at the holidays when it’s tempting to overspend as you fulfill wish lists. At Bank of Utah, customers have access to a free app called CardValet, which can help you control and manage your debit card usage, and your spending, even further, by setting spending limits, restricting transactions and more.
  • You need cash. Using a debit card at the cash register when you’re at the grocery store, a gas station, a pharmacy and other retail stores will allow you to get cash back and make your life a bit simpler. Bank of Utah customers also have access to over 24,000 fee-free ATMs nationwide.
  • You have no interest in paying interest. When you pay with a debit card, you avoid possible interest charges that could end up greatly increasing the price of your original purchase. Unless you have the means to pay your credit card balance off, in full, every month, you should always use a debit card, to prevent credit card debt.

Credit cards are good to use when:

  • You're shopping online. Both debit and credit cards can be used online, of course, and both offer fraud protection; however, it’s important to note again that debit card purchases take money almost immediately from your checking account. If fraudulent activity occurs, if an unauthorized charge is made when you’re cyber shopping, or if you didn’t receive what you paid for, you can flag or dispute it with your credit card issuer, and many times get the charge reversed, before you ever have to pay for it.
  • You’re making large purchases. A debit card usually comes with a daily spending limit. At Bank of Utah, that limit is $2,500. A credit card, on the other hand, typically has a higher spending limit, depending on your credit score. Let’s say your transmission goes out while you’re out getting your holiday grocery pick up. That can be a costly repair. Having a credit card could benefit you in the moment.
  • You’re booking travel. Traveling should be fun, not worrisome. Unfortunately, as a branch manager, I have had to help customers who have wrongly been charged for a flight, who have had travel reservations hacked and who have had hotels go completely out of business before they took their vacation. Again, using a credit card will help you dispute the charge before you pay for it.
  • You’re building credit, or looking for rewards programs. If you’re just starting out and need to boost your credit score, a credit card can help you do that, if you’re careful with your spending. If you’re financially secure, you may want to look into getting a credit card that rewards you for your purchases, but, again, still be careful with your spending.

Also, note that some credit cards, Bank of Utah credit cards included, offer an introductory 0% annual percentage rate (APR) on purchases and/or balance transfers. That means you don’t have to pay interest on your balance for a limited number of billing cycles. That can be helpful, and strategic, in certain situations, just always remember to pay off your balance before the introductory period ends.

Just to reiterate once more, credit card debt can become a serious problem. Just because you have access to credit and can buy that new laptop computer doesn’t mean you should. Know your finances. Know your habits. And make thoughtful decisions.

What is Right for You?

Now that you know more about the differences between, and advantages of, debit and credit cards, make the decision that is right for you. I recommend that you sit down, list out your spending habits, take into account any financial risks you foresee, and then take advantage of what the debit card or credit card offers, given your circumstances.

And just one last tip: Always read disclosure statements. They can help you define financial terms and understand how charges and fees can affect you. It’s definitely worth your time as you’re making financial decisions. And since it’s the holidays, bring a cup of hot cocoa to the table while you go through the fine print. Put a candy cane or peppermint stick in it – you know, whichever works best!

Don’t forget to try out “This or That” with your family and friends. You won’t believe the fun conversations it can start! Happy Holidays!

Helen White is a retired branch manager for Bank of Utah’s Tremonton branch.