Both credit and debit cards have a long list of positive and negative attributes. For example, using debit cards can help you avoid building debt. However, swiping your debit card is not as secure as paying with a credit card. Debit cards allow you to keep track of your finances, but they do not generally have rewards programs, which can be quite lucrative for disciplined credit card users. And, of course, there are many more pros and cons to consider.
If you gave it enough thought, you’d realize that there are advantages to using each type of card, but there are some situations when you will want to seriously consider opting for the credit card instead of a debit card.
When shopping online, a credit card is more secure than a debit card. If something happens and an online retailer is hacked or a third party somehow gets a hold of your number and information, your debit card is more vulnerable because it is attached to your checking account. Also, a credit card company is better equipped to deal with fraudulent charges and is able to advocate on your behalf. Sometimes, they are even able to catch the fraudulent charges before you do.
When you make large purchases, a credit card’s purchase protection policy could be useful to you. Even if the retailer does not accept the return of an item, your credit card company can act to cancel the charges to your account, forcing the retailer to accept the return. A debit card is more akin to cash when it comes to retail transactions. Once the retailer has your cash in hand (drawn from your bank via the debit card), you will need to deal directly with them to make the return.
When traveling, a credit card is a better option for making purchases small or large. Again, this is because a credit card company can deal with fraudulent charges and returns, even if you are not in the state or country where you made the purchase.
Airline tickets and hotel reservations are another type of purchase where credit cards have the advantage over debit cards. If you use a debit card to buy an airline ticket and your plans change, you may be forced to just accept the financial loss. Credit card companies can often give you a layer of protection against this. Using a debit card makes it possible for the travel agent or airline to get payment immediately. Your credit card account might also be charged immediately, but you don’t have to part with any money until you make a payment to the credit card company. This gives you time to argue your case and possibly get a full or partial refund for your cancelled trip. Some premium credit cards offer travel insurance that will reimburse you if you change your plans or cancel your trip for viable reasons.
Gas stations and other places where you pay automatically without a signature are prime targets for card-skimming (attaching a device to a card reader that steals your card number and sends it to a third party). It is easy to protect yourself by using your credit card in these situations. Again, this gives you time to dispute any fraudulent charges before you actually have to part with any of your money. With a debit card, it may be days before you even realize that you have been a victim of skimming. Meanwhile, the thief will have access to your bank accounts and can spend your cash freely.
Restaurants and bars are the only places where you have to give your card to someone who makes the charge while they are out of your sight. A credit card is a better choice than a debit card in these situations. This is because of the added protection mentioned in the other examples above and because unethical wait-staff are likely to be on the lookout for debit cards because it is easier to steal the numbers and get access to quick cash. An especially fool-proof way of paying at restaurants is to buy a gift card (the transaction takes place in front of you instead of out of sight) and then use the card to pay for your meal.