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Most people have strong opinions about debit vs. credit cards. Some swear by debit because it keeps spending in check. Others chase credit card rewards and travel perks that put $1,500+ back in their pocket each year.
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The truth is both tools can save you money, but in very different ways. It all comes down to how you manage spending.
Here are the biggest savings opportunities on both sides.
Credit card savings
Personally, my wife and I earn about $1,300 in credit card rewards each year. We don’t do anything fancy. Just use the right type of credit cards and pay our balances off in full every month.
Here’s where some top savings come from:
Save 5%-10% on travel
A great travel credit card can earn 5x points on flights or hotels. If each point is redeemed at just $0.01, you’re looking at a basic 5% savings on that trip.
Better yet, many rewards programs let you redeem points at a higher value for certain booking types. So it’s quite possible to achieve up to a 10% effective return, or more.
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Save 4%-6% on gas and groceries
Many families save big with gas and grocery rewards cards, which can earn around 4% to 6% back on these everyday categories. If you’re spending $600 a month at supermarkets, that’s roughly $360 a year in cash back without lifting a finger.
Save 2% on everyday spending
Flat-rate credit cards make life extremely simple. Some offer an unlimited 2% cash back on every purchase. And many don’t charge an annual fee. Even at a modest $1,000 a month in spending, that’s $240 back each year just for paying with credit.
Other savings and perks
Credit cards often come with extras that can be just as valuable as cash rewards. A few common benefits include:
- Welcome offers: Many cards attract new members by offering $200 to $1,000+ when you get approved and meet a spending requirement.
- Travel perks: Premium cards often include things like airport lounge access, priority boarding, or free hotel upgrades.
- Travel insurance benefits: Protections like trip delay coverage or rental car insurance can save you hundreds when travel plans go sideways.
Debit card savings
Debit cards don’t come with flashy perks or a big spending leeway. But their restrictions can actually be a huge advantage that can save you more in the long run.
Here’s how debit cards save you money:
Save yourself from overspending
With debit, you can only spend what’s in your checking account. That built-in limit makes it harder to slip into lifestyle creep or spend money you don’t have.
For natural savers, debit feels restrictive. But for people who’ve struggled with budgeting, that restriction enforces much needed discipline.
Save on debt interest
The average credit card APR is over 21% right now. Carrying a balance not only wipes out any cash back you earn, but it leaves you paying far more for things than the original cost.
Debit cards completely sidestep this risk. If you know you’re prone to carrying balances, sticking with debit may save you more in the long run than chasing rewards.
The smartest way to pay
So, which one really saves you more — debit or credit?
The answer depends on you. If you’ve had issues with debt or overspending, debit cards can be a safer bet. They limit spending to only the money you have in your account.
But if you pay balances in full each month, credit cards almost always come out ahead. Between rewards, travel perks, and welcome offers, the average household can save hundreds or even thousands each year.
The ultimate hack is to treat your credit card like a debit card. Only spend what’s already in your checking account, set autopay to clear your balance every month, and track your rewards as discounts — not as excuses to buy more.
That way, you get all the upside of rewards without the downside of debt.
Looking to earn more from everyday purchases? Compare the top rewards cards here and see which fits your wallet best.
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Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of Motley Fool Money. Joel O’Leary has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Target. The Motley Fool has a disclosure policy.
