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Credit vs. Debit: Should you use a credit card just for the points?

Clock3 min. read
byVexxit Staff onDecember 10, 2020

Regularly using your credit card for the sake of raking in perks can cause more harm than good if you’re not the disciplined kind. That’s just one of the reasons rewards debit cards are starting to emerge as an option for perk-hungry shoppers. Read the latest on going full circle from credit to debit.

“Constraints shape and focus problems and provide clear challenges to overcome. Creativity thrives best when constrained,” wrote Marissa Ann Mayer, VP of search products and user experience at Google in 2006.

The pandemic of 2020 has certainly presented restraints. There are fears this decade will be like the 1930s, an era of deep economic recession. Yet despite those hardships – or perhaps because of them – creativity in the ‘dirty thirties’ thrived. 

From Coco Chanel to Ernest Hemingway to the Parisian jazz scene to the art deco movement, artistic ideas flourished. Nifty inventions emerged, such as the electric razor, the ballpoint pen, instant coffee and … points cards. The 1930s was when paying with credit got professional. 

According to The Points Guy (aka TPG, aka thepointsguy.com), American Express had offered an early form of charge card, money orders and traveler cheques since the 19th century. It wasn’t until the Air Travel Card, introduced by American Airlines in 1934, that things really took off. The card offered a 15% discount on purchases with the airline. Before long, some 17 other airlines began accepting the card as payment. 

Back in the day, those rewards might have seemed a little more enticing. As TPG points out, “If you charged a $500 fare to the Air Travel Card, you would have earned a $75 discount. Meanwhile, charging $500 in American Airlines airfare to the Citi Aadvantage Platinum Card today earns 1,000 miles, which TPG values at $14.”

Certainly, the idea of using a points card to pay for everything seems like a good idea if one can earn a whole lot of cashback, or enough points to pay for an annual vacation. “The catch, though, is that regularly using your credit card for the sake of raking in perks can cause more harm than good if you’re not the disciplined kind. If you’re not in the habit of paying off your balance ASAP, your regular spending will rack up more debt than rewards – fast. That’s just one of the reasons rewards debit cards are starting to emerge as an option for perk-hungry shoppers,” says Rates.ca, a website that allows Canadian consumers to compare the costs and benefits of various card products.

The ScotiaCard SCENE debit card and the BMO AirMiles chequing account have long allowed people to earn points on their spending outside of a credit card. Recently, Moneysense gave a shoutout for “Best Rewards Chequing Account” to the PC Money Account – not quite a credit nor a debit card, but a prepaid card boasting major points earning power.

Everything comes full circle. The 2020s might be time to hunker down and get creative. It might be time to switch your cards to prepaid or debit – tools that financial professionals and debt counsellors recommend to help clients get debt under control. If you would like to talk to an expert on managing debt and credit solutions, you can find a financial advisor tailored to needs, free on Vexxit

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