Credit Cards vs. Debit Cards

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In 2009, the use of debit cards exceeded the use of credit cards for the first time in history. More and more people are realizing that spending money that you already have is often a better option than spending money that you haven?t earned yet and paying it later as you go.

However, it is unfortunate but debit cards are not as safe as credit cards.

Credit Cards vs. Debit CardsWith a credit card if a thief takes you card you can notify the bank and most often you will not be responsible for the theft. However, if you use a debit card you do not have that same safeguard. The thief will actually be using your own money rather than the banks and if you do not report it in a timely manner you may actually be responsible for the theft.

One remedy to consider is that most banks have alerts that you can put on your card so that they notify you anytime a charge is made that goes over a certain amount.

Another issue with debit cards is that a merchant can actually block your account until they are assured payment. This often happens at gas stations. The station will put a hold on your account for say?$100.00. Once you fill your tank and use only $40.00, they will only charge you $40.00 but the original hold of $100.00 could keep you from being able to access that additional $60.00.

Debit cards also offer you much less protection against shoddy merchandise. If you purchase something on an online auction site and it turns out to be a cheap imitation of what you purchased a credit card will allow you to dispute the charges and not pay?.but with a debit card you have already spent your own money. You?re on your own to get it back.

Debit cards may also cost you more in fees depending upon your bank. Debit cards are not accepted everywhere. In fact, rental car companies often require a credit card. However, there are instances where you can use a debit card and they send it through as credit. This, of course, is not foolproof and it probably does depend upon your own bank.

And last, for all the problems that credit cards can cause, they do help you to build credit. You can get a secured card if your credit is poor and start building credit but a debit card cannot do that. There are no credit repair benefits for using a debit card.

Do you prefer to use credit cards or debit cards?

 

Photo credit: LendingMemo.com