There are several key considerations when it comes to choosing whether to use a debit or credit card to pay. Credit cards provide many perks and benefits that debit cards do not. These benefits may be especially useful when shopping or traveling. For the most part, as long as you are a responsible spender, using a credit card is usually a better option than using your debit card.
When paying for an item many may be under the impression that a credit card should only be used if you can’t afford an item or are low on cash. In fact, it may be the exact opposite. When you have the money it a great time to use your credit card because you know you can get all the benefits your credit card has to offer without paying any interest.
Interest Not Necessary
Just because you charge an item, does not mean you will have to pay interest. Even if you are using a credit card that does not have a 0% promotional period you can still avoid paying interest. Since the credit CARD Act of 2009 consumer credit cards must give cardholders an interest free grace period of at least 21 days from the statement date. If you were considering using your debit card than you clearly have the funds. Just be sure to clear out the balance before the grace period expires and you will not be charged interest, but you will still get all the benefits that making your purchase on a credit card has to offer.
Gone are the days when a reward earning debit card was the norm. Currently the most popular way to get something back from the money you spend is through reaping the rewards credit cards have to offer. You can earn points, miles or even cash back. The rewards you can earn will usually equate to a penny on the dollar. So, if you are earning 5% cash back that would be like a nickel on every dollar. You will be surprised how fast these will add up. However, you may be able to get even more value from those rewards when you redeem them in ways other than cash back such as free flight or hotel stays.
Purchase protection is undoubtedly a good reason to purchase expensive or high-tech items with your credit card. Different cards have varying policies that can protect consumers from theft, loss or damage. The coverage period usually ranges between 30-90 days. All American Express and Discover credit cards as well as Visa Signature credit cards as well as World and World Elite MasterCards have complimentary purchase protection. It’s like having your purchases insured at no additional cost.
Extended Warranty Protection
Extended warranty coverage will usually duplicate the original manufacturer’s warranty for a period of up to year. This is a great reason to use your credit card to purchase expensive items like appliances. You do not need to register your product or incur any additional charges. If you charge the item on a card that provides this service it will automatically be eligible. However, each payment network has online warranty managers where you can upload your receipt and any original warranty coverage while you have them handy.
There is nothing more frustrating than finding an item you just bought at a lower price after you purchased it. Price protection is another benefit some credit cards have and that your debit card probably does not. This benefit may allow you to recoup the difference in what you spent compared to the new lower price being advertised. All Discover cards come with price protection. Most consumer Citi branded cards excluding co-branded store cards come with this feature. The Chase Sapphire and Freedom cards also come with this benefit. Most issuers will reward between $250 and $500 per claim and cover a period of between 60 and 90 days. This is a significant chunk of change and can provide shoppers additional peace of mind.
When traveling your debit card just can’t match the perks, benefits, and money saving aspects of credit cards. Not only do they provide a litany of insurance type benefits like lost luggage protection and trip cancellation. But you can also save money with these card by avoiding things like paying baggage fees or getting free lounge access. When on the road it is also good to know that many credit cards provide a collision damage waiver (CDW). However, be sure that the card provides primary and not secondary coverage. Secondary coverage means you will have to file a claim with your personal insurance first. However, if you don’t carry your own personal car insurance this may be irrelevant as secondary coverage gets bumped up to primary in these cases.
Build your Credit
Just having a credit card is not enough to achieve an optimal credit score and using a debit card will do nothing for it. However, the continual use and repayment of your credit card shows lenders you can repay debts responsibly and can significantly increase your score.
Not only will a good credit score make you eligible for the best credit cards, but along with those top credit cards you will also be able to access the best benefits. Also, a good credit score is imperative for getting good mortgage rates and low interest loans. Your credit history can also influence insurance rates such as auto insurance. Employers may check your score as well when considering you for a position.
Although debit and credit cards may look similar and both have sixteen digits, an expiration date and a security code, the benefits they provide consumers are very different. Many of the benefits can be especially useful when purchasing high priced items. But even on everyday purchases credit cards offer benefits that debit cards do not. Many people like to use their credit cards to charge every little thing just to maximize the rewards they reap. The only advantage a debit card has compared to a credit card is controlled spending. However, if you are budget conscious and know you are good with debt repayment, I don’t see any reason why anyone would choose to use their debit card over their credit card.
Credit Cards You May Like
Discover it® Miles Card
- 1.5 Miles on Airfare
- 1.5 Miles on Hotels
- 1.5 Miles on Gas
- 1.5 Miles on All Other Purchases
- Unlimited 1.5X rewards on every purchase
- Miles earned are matched at the end of the first year of cardmembership
- Up to a $30 statement credit each year for in-flight Wi-Fi purchases
- No Foreign Transaction Fee
Citi® Double Cash Card
- % 2% on All Purchases
- $100 cash back bonus after $500 in purchases within the first 3 months of account opening
- 3% foreign transaction fee
Citi ThankYou® Preferred Card
- 2x Points on Dining and Entertainment
- 1x Points on Gas
- 1x Points on Travel
- 1x Points on All Other Purchases
- 3% foreign transaction fee