Debit cards are everywhere, in nearly everyone’s wallet. Since they can be used anywhere that credit cards are accepted only without incurring interest, they’ve quickly become among the most popular financial tools available today. However, there are a few instances where credit may be more important that debit. Some purchases are better made with your credit card, and knowing what they are will help you recognize which piece of plastic is the right one for each occasion. Here’s a look at some of the things you should consider when you reach for your wallet during your next purchase.
First of all, think about avoiding debit cards when you’re making a purchase that involves making a large deposit. A good example is when renting tools or vehicles, where a refundable deposit is applied to your card. Credit cards will be the better option here since using your debit will actually remove the deposit amount from your bank account until the refund occurs. That could be days spent with hundreds missing from your finances, hundreds that you probably wouldn’t even notice if applied to your credit account. In short, if it requires a deposit, credit is the better of the two options.
Another hassle that you can avoid by using credit cards rather than debit is in recurring payments. Maybe it’s a gym membership or an account with a mail order supply company, but those accounts that charge you on an annual basis can wreak havoc on your bank account. Cancelations often fail, and using credit allows you more options to dispute charges than debit cards do. Additionally, forgetting your automatic draft could decimate your budget and cause you huge overdraft fees or other headaches. For recurring payments that are automatically drafted, opt for credit to avoid hassles and undue stress.
Many people also suggest avoiding using debit cards in restaurants due to the large number of people around who may be able to spot your card number and PIN. It’s up to you, but use them with caution. Finally, if you’re making a large purchase then you’re probably better off with credit cards as well. Large purchases that could be damaged or work incorrectly are much easier to dispute using credit than if you were using debit cards, and most credit companies give you the chance to take out additional warranties for a very small fee. Simply put, credit’s a better option in these cases.