SUMMARY: Choosing between a variety of payment options – including debit, credit, cash, checks, and digital wallets – depends on your goals, habits, and the situation.

With so many payment options available to today’s consumers, what should you reach for when footing the next bill? That depends on what you're paying for, your financial goals and what you have in your wallet — whether that's a traditional wallet or your digital one.

Debit cards are the second most commonly used form of payment, according to the Federal Reserve Financial Services’ 2024 Diary of Consumer Payment Choice Report. Debit cards are linked to your checking account and pull funds immediately upon purchase.

“They provide the ease of card payments while drawing directly from your own funds. There’s no debt involved, making them a go-to for budget-conscious consumers who prefer to avoid interest or overspending,” said Anthony Fletcher, American Airlines Credit Union’s Vice President of Payments & Digital Strategy.

Debit cards are easy to reconcile with your account, allowing you to track spending and monitor your money for fraudulent purchases. Consumers are also familiar with them.

Best for: Everyday purchases, including gas, entertainment and groceries
Paybacks: Ease of card use, some fraud protection, and directly drawing from the funds you have in your checking account are key benefits.
Drawbacks: You won’t earn rewards or loyalty points with usage. And with debit fraud, money is gone from your account immediately and you’re out funds while the bank investigates, with your liability increasing significantly over time.

Credit cards offer a range of benefits with the convenience of using a card. Rewards, travel perks, cash back and fraud protection are added perks to use credit cards for transactions. Using them responsibly also helps build your credit score.

"Credit cards aren't just a convenient way to pay — they're a powerful tool when used wisely. Our cards offer real value every time you swipe, tap or click," Fletcher said.

Credit cards can also help in a time of emergencies or when you need to make a big purchase, but don’t have all the funds available. Enjoy short-term financing and pay off responsibly and you’ll build solid financial credit.

“Credit cards allow you to borrow money up to a set limit, with repayment typically due at the end of a billing cycle,” Fletcher said. “Bottom line: Credit is best for strategic spending; debit is great for day-to-day discipline,” he said.

Best for: Large purchases, online spending, credit score
Paybacks: They offer rewards/loyalty points, and possible warranties. Under the Fair Credit Billing Act (FCBA), you’re only liable for up to $50 in unauthorized charges on your credit cards — and most issuers waive even that. You can also dispute the charge without paying it first.
Drawbacks: Used irresponsibly, credit cards can add to debt, have high interest rates and include fees to use.

Cash is not king anymore — but it has remained stable over the years. In fact, more consumers are carrying cash these days than five years ago, according to the Federal Reserve Financial Services. There are some occasions when having money on you offers a simple and quick way to pay especially for small purchases of $25 or less.

Best for: Small purchases, tipping, budget setting or purchases from local vendors to avoid additional credit fees
Paybacks: Cash is a simple and universal form of payment.
Drawbacks: It’s more of a challenge to track spending when you use cash as payment. Your purchases aren’t protected. And remember, it’s not wise to carry large quantities of cash.

Checks may seem like a relic, but they still serve a purpose. They’re often used in formal transactions where a paper trail is preferred.

Fletcher points out that for some, checks offer a sense of control, a way to keep financial records or a familiar way to pay. And while their use is declining, they remain a dependable option when electronic payments aren't practical or accepted.

Best for: Large purchases, rent or business invoices
Paybacks: Checks offer an easy way to track spending or move large sums of money.
Drawbacks: Many retailers aren’t accepting checks as payment.

Apps and digital wallets are the big new stars when it comes to payment. Usage has significantly increased over the past few years because of the ease of use and security that they offer.

“Digital wallets and peer-to-peer (P2P) apps shine in moments that demand speed and convenience,” Fletcher said. “Platforms like Apple Pay,® Venmo® and PayPal™ make it easy to transfer funds quickly without needing cash or a checkbook.”

The Credit Union’s Send Money offers members a secure, no-fee alternative that’s already integrated within their banking platform. It combines the ease of P2P payments with the reliability of a financial institution you already use.

Fletcher expects payment app usage to increase, complimenting traditional cards. “Payment apps will continue to rise, especially among younger consumers, but traditional cards aren’t going extinct,” Fletcher said. “Think of it as a flexible toolkit — different tools for different payment jobs.”

When linking a payment account, please note that credit cards usually incur a fee or aren’t allowed at all, so linked bank accounts or debit cards are preferred for most P2P transfers. Just remember to avoid sending money to people you don’t know personally.

Best for: Splitting a dinner check, sending rent to a roommate, or tapping your phone at checkout for a seamless transaction
Paybacks: It’s quick, secure and easy from the palm of your hand.
Drawbacks: There can be fees to transfer money from a P2P app to your financial institution. Credit Union Tip: Use Send Money from your desktop or your phone app to avoid fees.

Apple Pay is a trademark of Apple, Inc. | Venmo and PayPal are registered marks of PayPal, Inc.