{"id":189,"date":"2021-08-29T06:42:08","date_gmt":"2021-08-29T06:42:08","guid":{"rendered":"https:\/\/iceball.online\/?p=189"},"modified":"2023-07-29T16:22:14","modified_gmt":"2023-07-29T16:22:14","slug":"why-credit-card-is-better-than-debit-card","status":"publish","type":"post","link":"https:\/\/www.iceball.click\/index.php\/2021\/08\/29\/why-credit-card-is-better-than-debit-card\/","title":{"rendered":"Why Credit Card Is Better Than Debit Card"},"content":{"rendered":"\n

You’ll be amazed very few people know this<\/mark> secret!<\/mark><\/em><\/h2>\n\n\n\n

If you\u2019re like many people, you pull out your stalwart piece of plastic: either your bank-affiliated debit card or your rewards credit card.<\/p>\n\n\n\n

But is that really the best choice? Is there a reason you should switch to the other side?<\/p>\n\n\n\n

There are several key differences between credit cards and debit cards \u2014 here\u2019s when you might want to choose one over the other.<\/p>\n\n\n\n

Credit Card<\/strong>
A credit card is a card issued by a financial institution, typically a bank, and it enables the cardholder to borrow funds from that institution. Cardholders agree to pay the money back, with interest, according to the institution’s terms.<\/p>\n\n\n\n

What Are Some Important Advantages of Credit Cards?<\/strong><\/p>\n\n\n\n

1) Offer rewards<\/strong> on purchases you\u2019re already making.<\/p>\n\n\n\n

2) Provide additional benefits<\/strong>, like extended warranties on electronics.<\/p>\n\n\n\n

3) Give a \u201cfree\u201d month-long loan<\/strong> (when you pay your bill in full).<\/p>\n\n\n\n

4) Provide more flexibility when booking a hotel or renting a car<\/strong>.<\/p>\n\n\n\n

5) Provide protection<\/strong> if your card is lost or stolen.<\/p>\n\n\n\n

Earn Rewards<\/strong><\/p>\n\n\n\n

If you already go to Starbucks for your daily latte, you might as well earn some rewards on the money you\u2019re spending.<\/p>\n\n\n\n

Here are the most common credit card rewards you can earn:Cash back: <\/strong>Get a percentage (usually 1-5%) of each purchase back as a statement credit \u2014 which is like getting a small discount on everything you buy.
Points or miles: <\/strong>Earn points or miles on every purchase you make, and then redeem them for flights, hotel stays, or statement credits.<\/p>\n\n\n\n

Manage Fraud Better<\/strong><\/p>\n\n\n\n

Should you be more concerned about losing your debit card or losing <\/a>your credit card? The former, and here\u2019s why.<\/p>\n\n\n\n

When criminals fraudulently use your credit card, they\u2019re spending your credit card issuer\u2019s money.<\/strong><\/p>\n\n\n\n

When criminals fraudulently use your debit card, they\u2019re spending money from your checking account.<\/strong><\/p>\n\n\n\n

In other words, if someone uses your credit card without your permission, you\u2019ll have time to report and manage the fraud before your bill is due.<\/p>\n\n\n\n

With a debit card, however, the money leaves your account immediately \u2014 whether the charge is fraudulent or not. And, depending on your bank, it might take weeks or months to get your money back. In the meantime, you could miss important bill payments or have to borrow money for daily expenditures.<\/p>\n\n\n\n

And, whether you\u2019re victim to credit card fraud or debit card identity theft, federal law dictates your level of liability.<\/strong><\/p>\n\n\n\n

The Fair Credit Billing Act (FCBA) caps the liability of credit card users at $50. Most credit card issuers take this a step further and don\u2019t charge cardholders anything for fraudulent charges. But even if your card issuer doesn\u2019t offer that protection, the FCBA says you\u2019re not responsible for any <\/em>unauthorized charges if you report the card lost before it\u2019s used.<\/p>\n\n\n\n

This limited liability is one of the main reasons experts recommend using credit cards  \u2014 especially for online purchases.<\/p>\n\n\n\n

Debit card fraud protection, on the other hand, is covered by the Electronic Funds Transfer Act (EFTA) \u2014 and protection varies. <\/p>\n\n\n\n

Here\u2019s what you could owe, based on when you report a debit card loss:<\/p>\n\n\n\n

Debit card fraud liability<\/h2>\n\n\n\n
<\/tr><\/thead>
If you report:<\/td>Your maximum loss:<\/td><\/tr>
Before any unauthorized charges are made<\/td>$0<\/td><\/tr>
Within 2 business days after you learn about the loss or theft<\/td>$50<\/td><\/tr>
More than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you<\/td>$500<\/td><\/tr>
More than 60 calendar days after your statement is sent to you<\/td>All the money taken from your ATM\/debit card account, and possibly more; for example, money in accounts linked to your debit account<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Advantage of \u201cFree\u201d Short-Term Financing<\/strong><\/p>\n\n\n\n

When you use a debit card, the purchase is deducted from your checking account within a few days.<\/p>\n\n\n\n

When you use a credit card, you get a \u201cgrace period\u201d; you don\u2019t pay for a purchase until your billing cycle ends and your statement balance is due. And with most credit cards, you\u2019ll avoid interest completely if you pay your bill in full.<\/p>\n\n\n\n

In other words, you could get an interest-free loan for the period between making a purchase and paying your bill (usually at least a month).<\/p>\n\n\n\n

Travel Without Worry<\/strong><\/p>\n\n\n\n

When you\u2019re on the road, debit cards can be problematic.<\/p>\n\n\n\n

Many hotels, gas stations, and rental car companies place \u201cholds\u201d on customer cards that claim an amount of money until the final cost becomes apparent.<\/p>\n\n\n\n

Let\u2019s say you\u2019re checking into a hotel for five days. If the hotel charges $200 per night, the hotel will likely place a hold on $1,000, plus extra money for incidentals.<\/p>\n\n\n\n

If you\u2019re using a debit card, that money will be frozen until you check out \u2014 and that\u2019s even if the company accepts it (many require credit cards).<\/p>\n\n\n\n

Not exactly the making of a stress-free vacation, is it? On the other hand, when you use a credit card, a hold reduces your available credit \u2014 and not the money in your bank account \u2014 which means it won\u2019t put a damper on your vacation budget.<\/p>\n\n\n\n

Get Additional Benefits<\/strong><\/p>\n\n\n\n

Depending on your credit card issuer, you may also be eligible for further benefits like:<\/p>\n\n\n\n

1) Protection on purchases, including extended warranties on electronics.<\/p>\n\n\n\n

2) Travel perks, including rental car insurance and airport lounge access.<\/p>\n\n\n\n

3) A smattering of other services, including concierge services to help you buy tickets or make hard-to-get restaurant reservations.<\/p>\n\n\n\n

Quick facts: Credit card vs debit card<\/h2>\n\n\n\n
<\/tr><\/thead>
Credit card<\/strong><\/td>Debit card<\/td><\/tr>
Buy now, pay later<\/strong><\/td>Buy now, pay now<\/td><\/tr>
Interest on balances carried after bill’s due date<\/strong><\/td>No interest charges<\/td><\/tr>
Fees: annual, late payment, foreign transaction, balance transfer, cash advance<\/strong><\/td>Fees: monthly, overdraft, ATM, foreign transaction<\/td><\/tr>
Can build credit<\/strong><\/td>Can’t build credit<\/td><\/tr>
Limited liability for fraud<\/strong><\/td>Can have full liability for fraud<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Bottom line<\/strong><\/p>\n\n\n\n

Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn’t for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit. You can consider debit cards that prevent overdrafts, encouraging you to spend within your means.<\/p>\n\n\n