When should you choose credit over debit?Tuesday, May 22, 2012 at 4:44:38 PM
These days, millions of Americans are trying to avoid taking on significant amounts of credit card debt, or get out from under sizable existing balances, leading many to choose debit over credit to make their everyday purchases.
But in some cases, it may actually be a better idea for you to use your credit card instead of your debit card to make certain types of purchases. For instance, one great perk that credit cards provide and debit cards do not is protecting purchases. If a product is faulty or even not performing up to satisfactory standards, consumers may be able to get a refund from their lender even after the warranty from the manufacturer has expired.
In addition, if you have been recently affected by identity theft or are worried about the threat of this type of fraud, a credit card will give you greater protection. This is for two reasons: First, a credit card that is compromised is unlikely to drain your personal funds, and you will typically have a longer period to report the crime to your lender and have the fraudulent transactions stricken from your record (with debit cards, the cutoff is usually only a few days). Second, because your debit card is typically tied to a bank account of some kind, a crook can clean you out quickly and put serious strain on all aspects of your finances, rather than just affecting your credit card.
Credit cards can also be beneficial because they give you more spending flexibility than you otherwise might not have had, which can be especially helpful in purchasing necessities that you might not be able to afford all at once otherwise. Of course, when using a credit card, you should make sure you take every precaution to pay as much of your monthly bill as you possibly can to help you avoid racking up more debt going forward.
When not to use credit
However, for everyday purchases, debit may be the way to go, because the cost of these - for things like meals, snacks, and gasoline - can add up quickly if not carefully monitored.
You might also benefit from taking the time to go through a number of credit card applications and getting a card that will work well for you. Based on your previous spending habits, having the best credit card for your unique circumstances can be extremely beneficial.