Debit and credit cards are both convenient ways to pay for things without carrying cash. The beauty of using a debit card is that you are spending your own money in real time rather than borrowing it from your credit card company at what is most likely an exorbitant interest rate. I rarely use my debit card, however, except to withdraw money from my bank. I also NEVER pay interest. Let me explain.
I use my VISA credit card to pay for most everything that I can, including our car and home insurance, vehicle license renewals, etc. I then pay the balance IN FULL and on time each month, avoiding interest and late fees. My account has no annual fee and even earns points based on the amount spent, so each year I actually get a little back. But even if I got nothing, I’d still use my credit rather than my debit for one simple reason:
That’s right – fraudulent charges. I have two family members who recently dealt with fraudulent charges on their debit cards. Although unrelated, at different banks and months apart, both had charges of several hundred dollars originating in the UK hit their bank accounts. In both cases, the charges were obviously fraud but still took quite a bit of time and effort to resolve. We’re talking several phone calls, personal trips to the bank and paperwork. In the meantime, they were out the money – not a good thing if you have bills to pay.
In contrast, I noticed fraudulent charges on my VISA credit card account a while back. A simple phone call resolved the problem – the charges were immediately reversed and I was out nothing, not even for a minute. I also had the option of taking care of the problem online. I did have to wait for my new card to arrive (and I had my old number memorized – dang!), but that was the only inconvenience.
Should YOU Use Credit Instead of Debit?
So is using a credit instead of a debit card right for everyone? Only if you use your credit card like you would your debit card and spend only what you can pay in full each month. If you don’t have the self-discipline to do so, I guess you'd better stick with the debit card.