Every time you make a purchase, you’ll have to decide how you’ll pay. If you aren’t paying with cash or check, you’ll need to decide if you’re going to use a debit or credit card. But how do you know which to use and when? It usually depends on the kind of purchase you’re making. There are certainly some instances where using a credit card is the safer choice.
The Difference Between Debit and Credit Cards
When you use a debit card, it’s essentially like paying with cash. So if someone uses your debit card information to make fraudulent purchases, your own money is taken out of your account. And the money will not be back in your account until you dispute the transactions with your bank and they investigate. This means it may be a while before you get your money back, which can make paying for your other expenses difficult in the meantime.
On the other hand, credit cards don’t automatically withdraw your own money from a checking account. Instead, your credit card issuer pays the money up front and then you pay the money back through your credit card payments. This means that if there is a fraudulent transaction on your card, you can dispute it with your credit card company and work with them to get it resolved. During that dispute, you still have all your money in your checking account available to you.
Purchases to Make on Your Credit Card
1. Big Ticket Items
When you purchase a big-ticket item, like a major appliance or TV with a credit card, you may be able to take advantage of an extended product warranty. Always keep in mind that there will be items that aren't covered, so be aware of what protections are available to you.
2. ATMs and Gas Stations
Because ATMs and gas stations are outside and accessible, they’re an easy target for tampering. So before swiping your card at a gas station or outdoor ATM, look for the warning signs of a card skimmer that might steal your information, and always reach for your credit card for that extra protection and peace of mind.
It’s a good idea to be cautious of paying with a debit card when the card will be taken out of your sight for any amount of time. Restaurants are one good example of this. At many restaurants, your server will take your card away from the table to pay for your meal. When your card leaves your sight, it creates an opportunity for some untrustworthy person to steal your card information.
4. Online Purchases
Online hackers are a real concern in today’s world. When you use your debit card to pay for online purchases, your bank account’s funds are susceptible to fraud at the merchant’s website, at your home computer through malware, and even somewhere in the middle as a result of eavesdropping on your wireless network. Even at trusted sites, your payment information can be intercepted. So it’s always best to opt for the additional protection of using a credit card online.
5. Service Providers
Using a credit card is a safe and effective option for paying service providers, such as home improvement contractors. By using a credit card you have more substantial proof that you paid the service provider for the job if it isn’t done to your liking or not done at all.
Travel is unpredictable. And spending time and money in unfamiliar places can be risky. But using a credit card can help protect your liability and your purchases. In fact, your credit card may provide you with bonus travel perks like travel accident insurance, auto rental insurance, and free information services so you can know more about your travel destination.
Of course, using your credit card should always be done responsibly and with a plan to pay off your purchases. But there are plenty of reasons to use your credit card over other payment alternatives. So, the next time you open your wallet, think about the many protections and perks your credit card can offer. It might just save you some hassle and money down the road.