CBS Money Watch recently published an article stating four reasons why using credit cards is better than using debit cards. With all the hype over the Suze Orman Approved Debit Card, they wanted to set the record straight on a few reasons why you might not want to ditch the credit cards for a debit card any time soon. That is as long as you do not carry a balance to avoid interest fees.
The first reason is because you can rest assured knowing you are covered in the case of fraud immediately. When a purchase is made using a debit card, the funds are immediately deducted from your own money and if a charge is fraudulent, you must first report the incident to get your money back. With a credit card, there is a safety net between your bank account and the fraudulent purchase. If you find suspicious activity you can dispute the charge and your bank account funds will never take the hit.
Another great point that CBS talked about is the fact that debit cards, as of right now, do not help you build a credit history. Those that do not have credit cards are assigned average credit scores that are lower than those who have at least one credit card, according to Credit Karma, a website which allows consumers review their credit scores. Debit cards have no impact on your credit at all while credit cards, when used responsibly, can significantly increase your score.
When it comes time to rent a car or reserve a hotel room credit cards are king over debit cards for many reasons. For one, many of them provide insurance not offered by a debit card to cover the rental if it is damaged. Some hotels may not even allow you to make a reservation unless you have a credit card. When you book a reservation, some hotels place a hold that could be hundreds of dollars on your debit card which may cause your balance to be lower than it actually is and check to bounce.
The fourth and final reason CBS Money Watch gave for why to choose credit over debit is the amazing rewards possibilities offered by many rewards credit cards. These can be in the form of cash back, airline miles, college savings, gift cards and so much more. Those that do not carry a balance but spend a good amount of money on credit cards each month can greatly benefit from a rewards credit card over a debit card.
Just remember that these benefits will not be worth it for you if you carry a revolving balance. A credit card is only the right option for you if you can pay off the balance every month or are willing to pay interest charges to get the things you need.
As always, please stay tuned to CreditCardsProfessor.com for more of the latest credit card news, special credit card offers and important cardholder updates.
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