Debit vs. Credit: Why Credit Cards Come Out on Top

Person holding a credit card in a spotlight

Published: February 10th, 2023

By azzyazzy's avatar

Estimated reading time: 3 minutes.

Using a credit card for everyday purchases and bills can have a number of benefits, and in some cases, it can even be a better choice than using a debit card. Here are a few reasons why you should consider using your credit card for everything:

More protection against fraud

If your credit card information is stolen, you are protected by the Fair Credit Billing Act, which limits your liability to just $50. This means that if someone makes unauthorized charges on your credit card, you will only be responsible for paying $50 of those charges. On the other hand, if your debit card information is stolen, it is much more difficult to get your money back. The money is taken directly from your bank account, and you may have to go through a long and complicated process to get it returned to you.

Help you build credit

Your credit score is a measure of your creditworthiness, and it is used by lenders to determine whether or not to lend you money, and at what interest rate. One of the main factors that go into your credit score is your credit utilization ratio, which is the amount of credit you are using compared to the amount of credit available to you. By using your credit card for everyday purchases and paying your bills on time, you can help to improve your credit score. This can be especially useful if you are trying to buy a house or a car, as a good credit score can help you to get a lower interest rate on your loan.

Often offer rewards and benefits

Many credit cards offer rewards programs, which allow you to earn points, miles, or cash back on your purchases. These rewards can be redeemed for a variety of things, such as travel, merchandise, or statement credits. Some credit cards also offer additional benefits, such as extended warranties on purchases, purchase protection, and travel insurance. By using your credit card for everyday purchases, you can rack up rewards and take advantage of these additional benefits.

Help you budget

Using a credit card can make it easier to track your spending and stay on budget. Many credit card companies offer online tools or apps that allow you to see all of your transactions in one place, and some even offer budgeting and financial management tools. By using your credit card for everything, you can get a better sense of where your money is going, and make adjustments to your spending as needed.

Avoid overdraft fees

If you use your debit card to make a purchase or withdraw cash, and you don't have enough money in your bank account to cover it, you may be charged an overdraft fee. These fees can be steep, and they can add up quickly if you have multiple overdrafts in a short period of time. By using your credit card instead of your debit card, you can avoid these fees, as you will only be able to spend what you have available on your credit card.

Credit card drawbacks

Of course, there are also some potential drawbacks to using a credit card for everything. For one thing, if you don't pay off your balance in full each month, you will be charged interest on your purchases. This can add up quickly, especially if you have a high-interest rate on your credit card. It is important to be mindful of your spending and to pay your credit card bills on time to avoid interest charges.

Another potential issue is that using a credit card for everything can make it easier to overspend. It is important to be mindful of your budget and to only charge what you can afford to pay off at the end of the month. If you find that you are using your credit card to make impulsive purchases or to buy things that you can't afford, it may be a good idea to consider other payment options.

Finally, while credit cards offer more protection against fraud than debit cards, they are not completely immune to it. It is important to monitor your credit card accounts and to report any suspicious activity as soon as possible.

In conclusion, using a credit card for everyday purchases and bills can have a number of benefits, including protection against fraud, the ability to build credit, rewards, and benefits, and the ability to budget and avoid overdraft fees. However, it is important to be mindful of your spending and pay your credit card bills on time to avoid interest charges, and monitor your accounts for any suspicious activity. While credit cards may not be the right choice for everyone, they can be a valuable tool for managing your finances and making purchases.

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