Majority of people prefer debit cards over credit cards. That’s because they think if they use credit cards, then they will loose their financial stability after reaching to a certain point. The real deal is that you can take benefit from credit cards only if you use your credit card with discipline. However, there are certain situations, where using a credit card instead of debit card is a better idea.
Difference between Credit Card & Debit Card
First of all, you should understand the difference between credit and debit card. A credit card is actually a loan in which you are taking out certain amount of money. You have to pay off the interest and fees on that certain amount of money that is added up to your loan balances. On the other hand, debit card is a connection to your bank account and using a debit card means that you are using money directly from your account.
Unlike credit card, if you don’t have enough amount of money to make purchases, then your transactions will not be completed. In certain cases you can overdraw your funds but for this you have to take certain measures of overdraft protection. Without the active service of overdraft protection, your transaction will be denied if your bank account is empty. You have to pay a fee on overdrawing funds.
Situations Where You Should a Credit Card
With a debit card you can get easy access to your fund that you originally own and this is the main reason, many people prefer to use a debit card over credit card. However, there are certain situations where you should use your credit card instead of debit card.
For Online Purchases
Don’t take risk by using debit card for making online purchases. That’s because if the product that you have purchased isn’t what you thought it is, then you can dispute your purchases with merchants easily. Above that, you can take benefit from the fraud protection that is available already with your credit card.
For Large Deposits Requiring Purchases
It’s a wise option to use a credit card while you are making purchases that require large deposits, such as during traveling when buying gas, booking hotel, and renting a car etc. The company or merchant from where you are making purchases will put your account on hold. That’s because your payments can be increased anytime if you make further purchase, such as if you avail any extra service at hotel etc. If you use your debit card in such case, then it means your account will soon be empty and your checks will be bounced that will ultimately cost you a fee.
While Purchasing Costly Items
You should use your credit card while you have to purchase any expensive items. That’s because credit cards are come with automatic warranty protection that becomes activated when you purchase big items. The plus point is that in case of any fraud, you can dispute with merchants easily. Using debit card in this case is risky because once your money gone is gone forever from your account. While in case of credit card your money doesn’t go immediately it takes a little time during which if you find any fraud, then you can dispute it with you merchant.
For Better Rewards
Credit cards offer you better rewards than debit cards. To get better rewards, pay off your monthly payments on time because if you don’t pay off, then your interest charges can hurt the value that you avail from the rewards.
To Rebuild Your Credit
Debit transactions are not reported to the major credit bureaus and so they are not helpful to build your credit. You should use your credit card to rebuild your credit, as it works better indeed.
The true working of credit card depends on how you use it. If you use them in an irregular and unplanned fashion, then you’ll have to bear the problematic consequences.
