Is Using your Debit Card in Place of your Credit Card always a Good Idea?
The recession and national housing market crisis has begun shifting many consumers’ beliefs regarding credit cards and debt in general. As a result, many consumers have begun putting away their credit cards in favor of debit cards. But is this always the right choice?
More and more consumers are using debit cards over credit cards, and the data supports it: nearly 56 percent of consumers reported using a credit card in the past month, compared to 87 percent in 2007, according to Javelin Strategy & Research. In addition, total payment volume for debit cards surpassed total payment volume for credit cards for the first time since 2009. The study went onto report that it is estimated the number of people using a credit card during any given month will further drop to just 45 percent.
Although credit cards have been demonized by the government, the truth of the matter is that credit cards offer many protections that debit cards simply can’t.
Credit cards, unlike debit cards, offer the following benefits:
- Car Rental Protection – Many credit card issuers offer protection from car rental loss or damage, so it often pays to use your credit card when renting a rental car. Check your credit card’s terms and conditions before heading to the rental counter to be sure you will be adequately covered.
- Price Protection – If you purchase an item, only to find that same item for a lower price within a certain time frame (usually 30 to 60 days), you may be able to get a refund for that price difference through your credit card company. Citi, for example, offers consumers a rebate of up to $250 per item through their price protection plan.
- Purchase Protection – If you purchase an item on your credit card, only to have that item stolen or damaged during a certain time frame (usually up to 90 days), you may be eligible for a reimbursement through your card issuer. American Express, for example, offers its customers up to $1,000 per incident and up to $50,000 per card member per year. Purchase protection may also be used when a retailer will not accept a refund on an item.
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