How To Create Your Own Debit Card And Enjoy The Best of Both Worlds


make your own debit cardToday’s post comes from John over at I hope you find it as interesting as I did.

I have had to face the unfortunate situation of a stolen credit card number several times. Fortunately, I keep a close eye on my account so I quickly noticed the problem and notified my card issuer. They promptly closed the account number and whisked a new card to me in just a few days. Most importantly, all of the fraudulent charges were immediately credited from my account, never to be seen again.

It’s also a fact of life today that many people are in trouble with their credit cards. In a recently released report, “CardHub now projects that we will end 2015 with a net increase of more than $60 billion in credit card debt – putting us perilously close to a tipping point at which balances become unsustainable and delinquency rates skyrocket.” CBS news reported last year that nearly half of all Americans have more credit card debt than savings!

It’s easy to see why many would look for alternatives, the primary of which are debit cards.

In theory, it’s understandable why some love debit cards:

  • The purchase is debited directly from your bank account, avoiding the opportunity to spend money you don’t have.
  • Tracking expenses is easier as you’ll see each individual transaction on your bank statement and can easily assign it to the proper category.
  • No interest fees or over limit fees either.
  • Plus they are normally a part of the VISA or MasterCard network, so they’re accepted just about everywhere.

Yet, I don’t use my debit card. I have one as it came with my checking account, but I don’t even carry it in my wallet. I’m not sure I even remember my PIN!

Why I Don’t Use My Debit Card

The reason is simple: Fraud protection. I can’t erase the memory of my card being stolen and used fraudulently. Yes, I know the protection is supposed to be the same, and most debit card issuers will make you whole (if it’s “reported promptly”).

My concern is that while I’m waiting to be made whole, my money is not in my bank account. Debit card issuers have ten days to investigate the claim before having to return the money to the account (assuming they find a transaction was truly fraudulent).

Depending on the size of the transaction, this could create real problems. Suppose your rent or car payment was due? What if you needed groceries and your account was just cleaned out? Sure, we should all have emergency funds (not in our checking account!) to cover things like this. But let’s be realistic: unfortunately many Americans have little or no savings. I certainly don’t recommend this, but that’s the reality of the situation.

My solution: Create your own “debit card.”

Creating Your Own Debit Card

What is a “debit card” in reality? Quite simply, you’re prepaying your expenses by depositing funds in a bank account. As you swipe your debit card, the funds are removed from the bank account and paid to the merchant. In essence, you have set aside funds to be used to cover these transactions. You can’t invest or otherwise spend those dollars because they are committed to covering your debit card transactions.

How is this different than making a large “prepayment”** to your traditional credit card account, then working off the credit balance over time as you swipe your card? You’re still committing the funds up front to cover future spending. Those dollars still can’t be invested or spent elsewhere either – this is no different than the funds in your checking account waiting to be used via your debit card.

The big advantage is that when (not IF) your card number is stolen and misused, a simple call to your credit card issuer will remove the charge from your account, without tying up your money as they investigate.

I’ve been using this method for quite some time and it’s worked beautifully. My credit card account has a credit balance currently, and when it nears zero, I’ll “deposit” more funds to create a new credit balance.

I’m not going into debt as I’m using my own money, but I have a higher level of protection and convenience than using a traditional debit card.

Other side benefits:

  • I’m keeping my credit score high, both through current use of the account and low (or negative!) credit utilization. I’m not a big fan of the way credit scores are used, but it’s a fact of life so I may as well have as high a score as possible.
  • I’m eligible for better cash back rewards than I have found offered for debit cards. Of course, I never make a purchase strictly because of the rewards but if you’re going to buy something anyway, you may as well get a reward for it!
  • Often credit card issuer’s offer extended warranties on qualified purchases made with their cards. This seems to be less common with debit cards.
  • If you travel, many rental car companies will require credit (not debit) cards. Some will accept debit cards, but it will require your time to locate them, and with fewer rental companies to choose from, you may pay higher rental charges.

One word of caution: As the account is technically a credit card, you could exhaust the credit balance and keep on spending, incurring fees and interest charges along the way. If you’ve had credit card usage issues in the past, stick to the debit card or use cash! If there’s any chance you’ll find yourself in debt, skip this idea and simply keep a minimal amount of cash in your debit-card-linked bank account. Be sure to have funds available in another account to use if your debit card number is misused!

** To be clear: I am not talking about “Prepaid Credit Cards.” These traditionally have low limits and high fees. They have their place as vehicles to help repair credit problems for some people. For this post, I am referring to traditional credit card accounts only.

Author Bio: John Madison is a freelance CPA, financial coach and writes at John resides in Virginia with his wife and children.  He is active in his church, enjoys finishing a good run or workout at the gym, and enjoys leading personal finance classes in the community.

9 thoughts on “How To Create Your Own Debit Card And Enjoy The Best of Both Worlds”

  1. Great to see this article from John! I’ve never heard of anyone doing that, but I like it! I am one that just pays my balance off religiously on the last day of each month, but this is a creative idea for those people who never want ANY kind of debt balance attributable to them. Obviously your negative balance with the credit card company doesn’t earn any interest. But, in today’s low interest rate environment, you’ll probably make more in credit card rewards by using this method than you ever would by leaving at balance at the bank and using a debit card for purchases.

    1. Thanks, Kyle. Good point on the interest. In my case, the cash would be sitting in a non-interest (but no service charge!) bank account. And I keep the credit balance on the card rather low as I can enter free on-line transfers any time I need to.

      This works for me because I like to be totally debt-free, but don’t care for debit cards for the reasons I mentioned.

      Thanks again for your comment!


  2. Skimmers are way too common these days … I don’t use my bank card at PoS, only in bank machines that are well-guarded so I can pass cash!

    1. I agree, Kyle. I’m sure my card number has been swiped by a skimmer. That’s really what drove me to keep using the credit card instead of my debit card. Maybe one day technology will outsmart the crooks out there!

      Thanks for your comment.


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