5 Credit Card Over Debit Card Uses

Should I Use My Debit Card or Credit Card?

We’ve all been asked a thousand times, “debt or credit?” Well, the truth is that some purchases do matter. Sometimes there are significant differences in how credit and debit transactions are handled, so before you pull out your plastic to make your next purchase, know which purchases you should opt towards using credit over debit.

1. Large Purchases – Use Credit Card
Use your credit card to buy big ticket items. Not only do credit cards come with dispute rights, just in case something goes wrong with the merchandise, but your credit card may offer an extended warranty on the item. Many credit card providers also offer additional property insurance, such as car rental insurance and traveler’s insurance. Large purchases, equal large rewards with credit cards too, but don’t carry over the balance or you’ll end up paying more in interest.

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2. Internet Purchases – Use Credit Card
Experts warn, don’t use your debit card to make online purchases, as there is a potential vulnerability issue with your card being directly linked to your bank account. The same can be said for purchases made over the phone. The Federal Reserve’s Reg E covers debit card transfers, setting the consumer’s liability for fraudulent purchases at $50, provided the bank is notified within two days of discovering the theft. Most banks set the consumer’s liability at $0 automatically, but the hassle of going through getting the money put back in your account can be daunting, so use credit.

3. Restaurants – Use Credit Card
Restaurants are one of the few places where cardholders relinquish their card, handing it over to a complete stranger, often losing sight of the card, which is why there is a high potential for fraud. With this in mind, your best bet is not to let your card out of your sight, but if you must, make it a credit card. As mentioned, you are better protected should someone use a skimmer on your card, but many establishments will approve your debit card for more than your purchase amount assuming you will leave a tip, which can take several days to get the cash accessible again.

4. Recurring Payments – Use Credit Card
When a company offers a product or service on a regular basis, they will also offer the opportunity to make recurring payments. If a company has charged you for something without your permission, it is much easier to dispute if it is on your credit card. Also, you don’t want to forget about your recurring payments being deducted from your bank account and end up overdrafting, costing even more money. The same advice can be used when making PayPal payments, if given the option, use your credit card, not your PayPal information to make recurring payments, as your PayPal account is usually linked to your bank account.

5. Booking Travel – Use Credit Card
There are several reasons for using your credit card over your debit card when booking travel plans, especially if your trip is a few months away. If you use your debit card, the funds will be taken out of your bank account immediately, whereas a credit card can be paid down over time. Another reason is that many credit cards offer travel related rewards points, such as the Escape by Discover credit card. If your information is stolen from the hotel or travel agency, at least they won’t have direct access to your bank account.

Related Information
Five Tips for Online Shopping Safety
Credit and Debit Cards, What You Need to Know
Debit Card or Credit Card?
Visa Talks About Using Debit Cards as Credit Cards
Credit, ATM and Debit Cards: What to do if They’re Lost or Stolen

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Tags: Credit Cards, Debit Cards, Escape by Discover®, Extended Warranty, Internet, Recurring Payments, Rewards, Travel

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