Although debit is always the best option for those who struggle with finances, using a credit card has its advantages. So when do you know when to use credit and when to use debit? Here are a few rules of thumb when deciding.
Going with credit:
Shopping online itself comes with financial risks, since you have to divulge account names and numbers. But one of the benefits of using your credit card is purchase protection. If an item never arrives, arrives broken or damaged, or you have a dispute with the person making the sale, then you can ask your card company to withhold payment.
When buying bigger, more expensive items, such as a home entertainment system, certain appliances or electronics, or even furniture, buying with a credit card can extend the warranty, adding another year’s protection automatically. Review the specifics of your card before making purchases.
If you want to improve your credit history, and are able to pay off your purchases in full, pay with credit. This can have positive effects in the future when taking out loans or getting better interest rates.
Going with debit:
If you struggle with your payments or financial budget, go with debit. The money for purchases is taken out of your account immediately, and can be off your mind.
Most retailers accept debit cards for inexpensive purchases. Using your debit card for purchases under $50 is fast, simple, and convenient when you don’t have cash on hand.
Paying with your debit card helps you avoid interest charges and purchase only what you can truly afford. Keep track of your spending so you avoid overdraft, or look into overdraft protection.