6 Times when you should use a credit card instead of a debit card

Published 2:08 pm Monday, October 31, 2016

By Casey Costello

Habits rule our lives. There are many people who pay for everything using the same method – be it cash, credit, or debit. But there are certain situations where it’s better to pay for things with a debit card and there are other instances where a credit card is the right choice.

If you’re wondering when it makes the most sense to use your credit card, read on!

Email newsletter signup

Big Purchases and Electronics

Credit cards often offer you something called purchase protection and that usually means it’s smarter to use your credit card to pay for big purchases or electronics. If your new purchase is damaged, lost or stolen during a certain period of time after you purchase it, you can qualify to be reimbursed for the full amount by your card company.

Does the product you’re purchasing offer a warranty? Some cards also have extended warranty protection and can add up to a year to the warranty offered by the manufacturer if you use your card to purchase the item. Make sure to call your card company and see if they offer you these two benefits.

Travel Purchases

One of the best times to use your credit card is when you’re purchasing travel. Depending on your card, you could qualify for things like trip cancellation insurance, lost or delayed baggage coverage, flight delay coverage, travel medical coverage and much more. Planning on booking a rental car? Use your card and take advantage of the auto insurance offered by some credit cards.

Some cards also offer free bag check, access to airport lounges, and priority boarding when you use them to pay for your flight.

When You’re Building Credit

One important time to use your credit card instead of your debit is card is when you’re building or rebuilding your credit. Having a great credit score is important for a number of reasons. The most obvious reason is that you might need to borrow money in the future and having a great score will allow you to qualify for a loan or mortgage and get a low rate. But credit scores are also sometimes used to gauge your responsibility and trustworthiness and are checked when you submit a job or rental application.

A lot of people make the mistake of avoiding using credit cards after they’ve gotten into credit card debt. In reality, people who have made credit mistakes in the past should be proactive about making better credit choices now to ensure that they can rebuild their credit. Similarly, people who are just building their credit are often wary of relying too heavily on their credit card.

While you should pay off your balance at the end of every month, as long as you pay your minimum payment and keep your balance to just 20%-30% of your available credit, then you don’t have much to worry about since you are likely building a great credit rating.

Bonus Rewards Points

While many cards offer you rewards points on everything you spend, some cards offer extra points when you spend money on certain things. For example, travel credit cards often offer bonus points when you purchase flights or hotel packages. Similarly, some other cards might offer you bonus points on things you buy most frequently, like groceries and gas. If your card offers bonus points on a certain type of purchase, then it could make sense that you use your credit card for those purchases.

When You’ll Get a Discount

Sometimes, you can get a discount by using your credit card. This is particularly true with department store credit cards. For example, stores like Target and Sears offer everyday or special discounts if you use their credit cards to pay for your purchases.

“Many store cards offer discounts, but you should be careful not to leave a balance on most store credit cards. As a rule of thumb, store credit cards often carry much higher interest rates. For example, the Big Lots credit card currently has an interest rate of 29.99 percent” said Nate Matherson, Co-Founder of LendEDU.com.

Your credit card company might also give you discounts at certain retailers for using your card. For example, some companies negotiate discounts at amusement parks during the summer.

To Protect Against Fraud

If you’re paying for something at a place that seems a little sketchy, it makes sense to use your credit card instead of your debit card. A credit card can be cancelled if your information is stolen and you won’t be liable for any fraudulent charges. But it might be difficult to get your money back if it is stolen from your debit card.

Now that you know when it makes sense to use your credit card, get out there and start using it. If you have a rewards card, then you’ll also be collecting cashback or rewards points which you can use in the future.

LendEDU is a content partner of The Oxford Eagle providing news and commentary. This content is produced independently of The Oxford Eagle.