Five Cent Nickel posted today about the advantages of a debit card, and I thought I should share the benefit I found for mine as well. Recently, I signed up for Costco, which at some point will show up as an entry on its own as soon as I’m able to calculate how much I’m saving by shopping there (which so far seems like a good amount!). Imagine my surprise when I find out that the only credit card Costco accepts is American Express. As I began turning around to head home and dig out a personal check, the woman asked if I had a debit card. Which I did, but I never considered it an actual debit card since I only ever used it for ATM transactions.

After a quick mental check of my current balance, I reluctantly handed over my card. The immediate transaction almost felt like a punch in the gut, something I didn’t usually experience with my credit card. My only other option though was to apply for an American Express card. I currently have four credit cards, and even though I only use one I am reluctant to cancel any.

So for the time being I am doing something I swore I would never do, which is use a debit card. However, the most important thing is that I am using it a store where it’s very unlikely I would have to contest any charges. This is one of my main concerns with debit cards: Once a charge goes through, that money is simply gone. I am sure that there are ways to contest debit charges as well, but I would much rather have the money still in my hands when contesting a charge, as you do with a credit card.

I also don’t like the idea of a card in my wallet giving someone direct access to my bank account through store purchases either, even though I do believe you always need the PIN number when making debit purchases.

Lastly, I like having all of my purchases listed in my credit card account in Quicken, while having all of my ATM, salary, and bill transactions in my bank account.

The only reason I see for using a debit card is for people who can’t control there spending (which, judging from how many people pay interest on credit card debt, is a lot!). For everyone else, I say keep the debit card in your wallet except for ATM (and Costco) transactions, and instead take advantage of the protection and benefits offered by your credit card.