For many Americans (especially those leery of accumulating debt after a bankruptcy filing), debit cards are often a safe and convenient way to pay for purchases. But, while debit cards have many advances over credit cards, they aren’t perfect. Here are a few tips for those who want to use their debit cards wisely.

• Understand the difference: When you buy with plastic, a clerk may ask you “credit or debit.” The difference is that a debit purchase takes money from your account immediately, while a credit purchase may take a few days to hit your account. Take this into consideration when checking your balance (and determining how much money you have).
• Check your balance regularly: If you don’t keep a careful, purchase-by-purchase check register, you should be taking advantage of online account tracking tools. It’s a good idea to get into the habit of checking your balance online once a day so you always know how much money you have available.
• Reconsider overdraft protection: The Credit CARD Act means that come August, you’ll have to choose whether you want overdraft protection for your debit card—and, depending on the fees your bank charges, you may not. Instead, look into linking your debit card to a savings account of line of credit for unexpected overdrafts.
• Choose a sneaky PIN: One way to protect your money is to make sure your personal identification number (PIN) isn’t easy to guess (i.e. no birthdays, anniversaries or consecutive numbers).
• Understand holds: Some retailers (including, often, gas stations, hotels and car renters) will put a “hold” on purchases made with debit cards, meaning that they’ll reserve more than the amount of the purchase to ensure payment. This can mean more money is tied up than you spent (though it will be released eventually), and can lead to unfortunate check bouncing. Consider making travel-related purchases with a credit card.
• Know when to use credit: Bigger purchases (especially those bought online) often lend themselves better to credit than debit. Credit card companies offer the protection of withholding payment if a purchased item doesn’t meet expectations (in other words, you can file a complaint and get a refund). With debit cards, though, your money leaves your account as soon as you’ve made your purchase. Just make sure you set aside funds to pay off your full credit card balance when it comes due.

Ultimately, it’s important to remember that debit cards can be a great way to make sure you don’t get into too much debt, but they aren’t ideal for all purchases. To ensure that you’re maximizing the benefits your debit card has to offer, review your contract and call your bank with any questions.

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