3 Reasons Credit Cards Can Be Better Than Debit Cards

A lot of consumers treat credit and debit as if they're the same thing.  Well, hopefully beyond assuming their debit card has a bottomless limit, we hope.  To a lot of people, choosing whether to pay with credit or debit is more a function of deciding whether you want to pay now or pay later, collect some rewards points for this purchase or just get it paid for and not think about it.

But maybe you should stop and think more carefully.  Credit cards and debit cards are not the same thing in some very, very crucial respects, and choosing a credit card over a debit card can sometimes save you a lot of trouble financially.

Here’s how:

#1) If Your Debit Card is Stolen, You May Have More Liability

As you've probably heard by now, federal law limits the liability for stolen credit cards to $50.  And, in fact, that's only for the actual card: under the law, if your credit card number is used, not your card, you have no liability whatsoever.  And in practice, you have no liability; most credit card companies will simply waive the difference.

Debit cards, however, have much stricter rules and much higher ceilings.  If you don't report your debit card as stolen within two days of becoming aware of the problem, and your card is used, you're liable for up to $500!  In fact, to have no liability at all, you have to report your debit card as stolen before any fraudulent charges are placed on your account.  In short, if you're making a purchase, especially online, a credit card simply offers more protection.

#2) Credit Cards Have Better Customer Service

Say you buy something from the store and use your credit card.  You bring it home and its damaged.  You go to the merchant, who couldn't care less and won't give you a refund.

With debit cards, you're likely out your money: you'll have to talk to the bank, and the bank's hands may be tied depending on the situation.  The credit card companies, on the other hand, have an investment in making sure you're happy.  You can reverse the charges and force the merchant to work with you; or there may be certain benefits, like Purchase Protection, that mean that even if the merchant won't replace the item, your credit card company will.  Higher-end credit cards will even have concierge services that will help you negotiate the waters of a return...free of charge.

#3) Credit Cards Have Automatic Benefits That Protect You

As we've mentioned before, credit cards have all sorts of automatic insurances and protections that kick in when you use them. You may rarely make use of these, but will nonetheless be very, very happy they're there when you need them.  For example, if you travel, you should put your airfare, hotel, and car rental on a credit card, because then you can, for example, take advantage of the lost or rerouted luggage insurance, cancellation insurance, or roadside assistance.

Even if you don't have these insurances, if you get in a dispute with an airline or rental car agency, you'll be able to discuss the issue with your credit card issuer and get some satisfaction.  With debit cards, you might be out of luck.

So, before you choose, think carefully: it might save you a fortune in the long run.

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