6 Reasons Why You Should Use Your Credit Card Instead Of Your Debit Card

Should you use your credit card or your debit card for everyday purchases? What about big ticket items? And shopping online? Believe it or not, there are plenty of key differences between paying with your credit card and paying with your debit card.

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Debit cards are great for ATM withdrawals and deposits. For all other transactions, we recommend swiping your credit card. Below are six compelling arguments for using credit instead of debit.

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1. Credit Score: Your credit score plays an important role in your finances, like qualifying for a premium credit card and getting a good rate for a loan. If used correctly, credit cards can help you build or improve your credit. Debit card use, on the other hand, doesn’t have any affect on your credit score.

Here are some tips to improve your credit score.

2. Rewards: Credit cards are extremely rewarding if you know how to maximize them. Even if you go with a simple, flat rate, cashback card, you’ll be earning at least a little something for your purchases. With debit card spending, you’ll earn zip.

Here are the best reward credit cards.

3. No Cash Holds: Checking into a hotel room or picking up keys for a rental car usually requires a big deposit. And if you use your debit card for that, you’ll be locking up a big chunk of your money until after your travel is over. With a credit card, these holds show up as “pending” against your line of credit, so you still have access to your cash.

TIP: Use your credit card for hotel, car rental and party rental deposits.

4. Fraud Protection: Although debit and credit cards look similar, they come with very different rules regarding fraud protection. Here’s a look at the basic protections and consequences in case of debit card fraud compared to credit card fraud:

DEBIT CARD FRAUD

– You’re responsible for up to $50 of unauthorized transactions if you report the card as lost or stolen within 2 business days.

– If you didn’t report the card within 2 business days, you could lose up to $500 if someone uses your physical debit card without your permission. You must report the fraudulent charges within 60 days after your statement is mailed to you.

– If you didn’t report the fraud within the 60-day window, you face potential unlimited damage if someone uses your debit card without your permission.

CREDIT CARD FRAUD

– You are not responsible for unauthorized charges if your credit card number is stolen.

– You won’t be held liable for more than $50 in authorized charges if your physical card is stolen.

As you can see, you get a lot more consumer protection with a credit card than a debit card.

TIP: Use your credit card when you shop online and at restaurants, self-checkout lines and pay-at-the-pump terminals.

5. Travel Protection: There are plenty of things that can go wrong when you travel – missed flights, severe weather, lost baggage and much more. If you book your trip with a debit card, you’re pretty much on your own. But with a credit card, you’re most likely covered with travel protection insurance.

TIP: Use your credit card to purchase airline tickets and make hotel and car rental reservations.

6. Purchase Protection: Similarly, most credit cards offer purchase protections, while debit cards are lacking in this area. These protections may include extended warranty coverage, return protection and damage and theft coverage for recent purchases.

TIP: Use your credit card to purchase big-ticket items like furniture and appliances.

Bottom Line

We get it. You don’t want to use credit cards because you want to avoid racking up a huge debt. But debit cards are also full of hidden dangers. To keep from overspending, purchase things only as you normally would with a debit card, and pay your statement balance in full and on time.

For more credit card tips, click here.

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