Feb28
When to Choose a Credit Card over a Debit Card
Debit cards are ideal, as they allow individuals to stay within their budget and spend only what they have. However, there are time when using a debit card is not a good option. Credit cards boast a number of advantages over debit cards, although they can be used in generally the same way. In other words, don’t let the debit cards fool you: they simply can’t offer the protections afforded by credit cards.
Here are times when it is best to choose a credit card over a debit card:
- Shopping online – Because debit cards are linked directly to your bank account, you may leave your finances vulnerable should an identity thief steal your card’s numbers. Although there are some protections afforded to debit card customers in the case of identity theft, the protections afforded to credit card customers are more comprehensive. In addition, although you may be protected from fraudulent use of your debit card, having your bank account drained may cause additional problems, like bouncing checks or not having enough money to cover living expenses.
- Expensive purchases – Any expensive purchase is best bought using a credit card, as it will likely offer you dispute rights if something goes awry with the product or service. Also, many credit cards feature extended warranties, thereby eliminating the need to purchase them from the retailer.
- Deposits – If you must use a credit card to hold anything from a hotel stay to a car, the company will likely take a security deposit against your debit card. In other words, if you reserve a hotel they may charge you a $200 security deposit that is returned after your stay; however, if you use a debit card to reserve the hotel room, you won’t have access to that $200 until your stay had ended.
- Restaurants – Using a debit card at a restaurant may set you up for loss. Anytime someone needs to walk away from you, out of your sight, to make a charge purchase, there is a chance of theft. With this in mind, it is best to use a credit card when you dine out, thereby better protecting yourself from the ill effects of identity theft.
