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4 Reasons to Choose Credit Over Debit

Oct. 2, 2013
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

Two generations ago, figuring out how to pay for day-to-day purchases was a non-issue: nearly everything was bought and sold with cash. Times have changed a lot since then, and these days there are not only a host of new opportunities to spend (hello, online shopping!) but also a number of different ways to pay for those purchases.

For most people, the way to pay for their stuff really boils down to a choice between credit cards and debit cards. In recent years, may consumers have become disenchanted with credit cards because they require us to take on some short-term debt, and the recent recession has soured many peoples’ tolerance for borrowing money. This has caused many people to turn to debit cards as their payment method of choice.

However, what many of us don’t consider is what we’re missing out on when we choose debit over credit. It turns out that there are a lot of benefits to using a credit card, benefits that are often overlooked. Still not convinced? Check out the information below for four ways that credit cards have debit cards beat.

1.You’ll build your credit history

Having a solid credit history is really important to your financial life; everything from buying a home or car to getting a job is made much easier by having a good credit score. One of the easiest ways to build good credit is to use your credit card responsibly, which means making purchases with it frequently and paying those purchases off at the end of the month. Debit cards, on the other hand, do nothing to build your credit. So since you’re going to have to buy stuff no matter what, why not use a credit card and realize the benefits to your credit at the same time?

2.You’ll get cool rewards

One of the best things about all the competition on the credit card market today is that banks have really felt the pressure to step up their game when it comes to rewards programs. Whether you’re interested in frequent flier miles, cash back, or gift cards, there’s a credit card out there that will offer the reward you’re looking for. Debit cards? Not so much. While there are some debit cards that offer some incentives, these cards are hard to find and the programs don’t hold a candle to those offered by credit cards. So if you’re looking to get rewarded for your day-to-day spending, you’re much better off using a credit card.

3.You’ll get increased protections

With the increased attention paid to identity theft in recent years, both debit and credit card issuers have improved the fraud protections they off to their customers. But if a thief makes an unauthorized purchase with your debit card, that money is gone – at least for the time being. It could take days for your bank to refund your account, and in that time you might have bills that need to get paid. On the other hand, if shady purchases are made with your credit card, the company can correct the error without any actual funds being taken from your account. In this sense, using a credit card is a much safer option.

2.You’ll get better side benefits

A lot of people don’t realize it, but shopping with a credit card offers a host of other benefits and protections beyond just the rewards program the credit card carries. Credit cards offer perks such as extended warranties, roadside assistance, and certain types of insurance that debit cards simply don’t. Check with your credit card company about exactly which of these bonuses you qualify for, but it’s likely you’ll be pleasantly surprised. If using a credit card wasn’t great enough, these little extras really seal the deal!