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How to Use a Credit Card Like a Debit Card

Credit cards are inherently risky -- here's how to avoid some common pitfalls.

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Credit cards have a myriad of uses. They can help you avoid interest while financing a large purchase, provide a return on your regular spending and, when used responsibly, help you build credit. 

But they also have their risks. If you carry a balance, you could fall prey to expensive interest charges that could wipe away your rewards value, lead you into credit card debt, and hurt your credit score.

Treating your credit card like a debit card by paying it off as you spend can help you get the benefits of credit cards while avoiding some of their downsides. You’ll ditch interest rates and fees, while still reaping rewards and improving your credit score. Here’s how.

What does treating your credit card like a debit card mean?

To use your credit card like a debit card, you simply pay off your charges after you make them, instead of waiting for the end of your monthly billing cycle. 

When you use your credit card, you aren’t actually spending, you’re borrowing against a line of credit. When you use a debit card, the money immediately comes out of your bank account. Manually paying off your credit card purchases soon after making them turns the whole payment process into something like a delayed debit card.

Why would I want to treat my credit card like a debit card?

Using your credit card like a debit card helps you avoid a number of credit card dangers.

No interest or finance charges

If you’re paying off your credit card purchases immediately, there’s no risk of running a balance and paying interest. Using your credit card like a debit card eliminates the chance of carrying credit card debt from month to month. 

Due to Federal Reserve interest rate hikes, credit card rates are rising. The average credit card APR for the first quarter of 2023 was 20.92%, or $209 annually on a $1,000 balance. When you use your credit card like a debit card, you don’t have to worry about rising APRs.

No late fees

Using your credit card like a debit card can prevent you from facing late payment penalties and penalty APRs.

Improve your credit

One of the lesser-known factors of your credit score is your credit utilization ratio, or the amount of available credit that you currently have borrowed. Experts and the credit bureaus recommend keeping that ratio below 30%, or a $1,500 balance if you have one card with a $5,000 limit.

By paying off your credit card purchases quickly, you’ll keep your credit utilization very low. As long as you’re actively using your credit card, you shouldn’t have to worry about a zero ratio hurting your score, according to major credit bureau Experian.

And the biggest factor in your credit score is late or missed payments. If you pay off your credit card whenever you use it, there’s no risk of paying late or forgetting to pay your bill.

Why not just use a debit card instead of a credit card?

When you use your credit card like a debit card you mitigate the risk while still appreciating the benefits some credit cards offer. Here are some reasons why you might want to use your credit card -- and pay off purchases right away -- rather than use your debit card.

You could earn rewards

Many credit cards provide rewards for spending, sometimes as much as 10% for specific purchase categories. Rewards cards can pay you back when you make qualifying gas, grocery or even streaming service purchases. Plus, some credit cards offer a flat rewards rate every time you insert or tap your card, rewarding you for everyday spending.

Using a credit card instead of a debit card lets you maximize those spending rewards, which you can redeem for cash back, travel, gift cards and more.

Build your credit

Using a credit card can help you establish and build credit. Though most credit cards send your payment history to credit bureaus, some may not. Make sure you opt for a card that does, so your on-time payments can begin to boost your score.

Once you start purchasing and making payments, your provider will start sending that information to the three major credit bureaus. Using a debit card, however, usually has no impact on your credit score.

Additional purchase protections

Credit cards generally have greater purchase protections compared with debit cards, particularly when it comes to fraud. Credit cards offer zero-fraud liability, while debit cards are less certain, though Mastercard and Visa now offer zero liability for debit cards. 

You’ll generally need to report a lost or stolen debit card within two days to minimize your loss from fraud, while credit cards offer a longer timeframe. Some credit cards also offer additional purchase protections, such as warranties or insurance against theft or damage.

Tips to effectively use your credit card like a debit card

Treating your credit card like a debit card is a simple financial hack that requires a bit of effort and attention to work, but the potential benefits for certain consumers are considerable.

Set a budget

To avoid overspending, there’s no way around it: You need a budget. When you only make purchases you can afford to pay off immediately with your credit card, you’ll avoid accruing credit card debt.

But to figure out what you can spend, it’s helpful to set a limit for certain categories, like groceries, restaurants and nonessential spending. Holding to your budget will also ensure you’ll get a good value from your card’s rewards -- interest charges can quickly erase any value you’d get from them.

Regularly review your credit card account

Check your online account activity regularly to make sure you’re on track with your budget. Many credit card issuers make it easy to see your purchases in an app. 

For example, American Express’ app lets you track purchases and pay each off individually, which makes it easy to pay off what you buy right away. Also, checking your statement can help you keep an eye out for unrecognized charges.

Set up spending alerts

Most credit card providers let you set up account alerts when a transaction is added to your account. This can make tracking your spending a bit easier, and eliminate some of the confusion if you see a charge on your statement you don’t recognize.

Make daily or weekly payments

If you pay off your credit card as soon as you make a purchase (like how a debit card works normally) you won’t have to worry about interest charges. It’ll also ensure you don’t miss a credit card payment, which could lead to damaged credit or a higher penalty APR.

Use autopay

Most credit card providers also offer automatic online payment services that will let you pay off your current balance at regular intervals. It’s fairly easy to set up a weekly recurring payment that covers your credit card balance, but you’ll need to be a little more diligent in tracking your funds to make sure you have enough money for your week’s purchases.

Correction: An earlier version of this article was assisted by an AI engine and it mischaracterized some aspects of debit card fraud protection. Those points were all corrected. This version has been substantially updated by a staff writer.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Peter is a writer and editor for the CNET How-To team. He has been covering technology, software, finance, sports and video games since working for @Home Network and Excite in the 1990s. Peter managed reviews and listings for during the 2000s, and is passionate about software and no-nonsense advice for creators, consumers and investors.
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