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10 Reasons Why Credit Is Better Than Debit

While debit cards could help keep you from racking up debt, credit cards might still be the better payment choice

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    Travel Rewards

    Credit cards offer juicy travel benefits such as airline frequent-flier miles, free hotel stays or discounted car rentals. That makes it easier on your wallet if you go visit the kids or grandkids.

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    Limited Liability

    You’re only on the hook for $50 for unauthorized use of your credit card. Many banks offer zero-liability policies if you’re victimized by fraud. But your liability could be $500 or more if the same thing happens with your debit card.

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    Credit Rating

    Using a credit card wisely, such as paying bills on time and not maxing it out to the credit limit, improves your credit rating. Using a debit card does nothing for your credit score.

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    Price Protection

    Many big banks issue credit cards that come with price protection. If you buy something, and then it goes on sale later (usually up to 60 days), you can get a refund for the difference. Not so with debit cards.

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    Charge Disputes

    If you have a problem with a purchase, you can dispute the credit card charge with your bank and you don’t have to pay while it is in dispute. With a debit card, the money has already been taken from your account, and you’ll have to fight to get it back.

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    Payment Flexibility

    A credit card allows you to get a high-cost product or service now and pay for it over time. You can’t buy big-ticket items or expensive services with a debit card if you don’t already have the cash in your checking account.

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    Free Insurance

    Many credit cards offer no-cost insurance coverage, such as free car rental insurance, trip cancellation insurance, or free warranty protection or warranty extension. You don’t get this insurance from debit cards.

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    Random Freebies

    Credit cards provide a host of other free benefits, ranging from concierge services to free credit scores. Getting these extra perks means you’ll keep additional dollars in your bank, which is important if you’re living on a fixed income.

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    Merchant Acceptance

    Not all retailers and merchants accept debit cards — at least not without drawbacks. For example, car rental companies and hotels will put a hold on debit cards, and some foreign merchants won’t take debit cards at all.

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    Cash Bonuses

    Some banks offer lucrative cash bonuses to sign up for their credit cards — some as high as $500. Also, many credit cards give cash-back rewards. Debit cards generally don’t give you cash incentives.

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