There you are at the checkout counter, reaching for your wallet to pull out a card and pay. But wait – which card should you use? If you listen to the advice of some money experts, they’ll tell you to pay using your debit card so that you don’t put yourself into debt.
While that’s a sound piece of financial advice in general, there are times when using your debit card is not the wisest choice. Let’s take a look at five reasons why it is often better to use a credit card over a debit card.
1. They can serve as short-term, 0% interest loans
When we get our monthly credit card bill, we have to pay what we’ve charged to our card during the month. But as long as we pay the entire amount we’ve charged, we’re essentially getting a no-interest loan for up to 30 days. Some cards even have a further grace period that can extend our zero-interest loan for another couple of weeks.
2. Points, rewards, air miles and cash back
Credit card companies offer rewards for using their cards on purchases from gas to groceries and of course big ticket items. Depending on your spending habits, these reward points can add up to free flights, hotel stays, goods, services and just about anything else your heart desires. And don’t forget the cash-back bonuses.
Looking for rewards of your own? Check out our hand-picked selection of credit cards with points, gifts and more.
3. Purchase protection
Purchase protection is an often overlooked benefit that many major credit card companies offer cardholders. In many cases, having a charge removed from your credit card is much more simple and convenient than doing the same with a debit card.
Think of it as an insurance plan on that new pair of designer sunglasses you just bought. If anything happens to your new purchase during the covered period – usually between 30 and 90 days – you may be eligible for reimbursement through your credit card company.
Some cards even have return protection, in case you decide later that you don’t want a purchase but the store won’t take it back. Now that’s something a debit card just can’t beat.
4. Enhanced warranty protection
Warranty protection is another perk that can make using a credit card a better option. Many credit cards will offer double the manufacturer’s warranty on purchases of up to two years on electronics, appliances, furniture, or just about anything. American Express offers extended protection on warranties up to 5 years. So now you can decline that add-on protection that the clerk wants to sell you, and still be protected.
5. They can help build your credit history
Maybe one of the best reasons to use your credit card instead of a debit card is the benefit to your credit score. Using your debit card does nothing for your credit history or FICO score, but responsible use of your credit card can lead to a higher credit score.
And of course, having a good credit score can lead to all types of other benefits like lower interest loans and better credit card terms in the future.
When used wisely, credit cards can be a consumer’s best friend. Think of all the perks, benefits and rewards a credit card offers, and you’ll probably never use your debit card for purchases again.
Photo credit: thetelegram.com
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.