Debit cards deserve a place in everyone’s wallet. They allow easy access to cash, help you stick to a budget, and can even help you avoid some unnecessary fees. But they’re far from the answer for everything.
First off, credit cards offer stronger protections than debit cards. Think of your debit card as the key to your bank account. If someone gets their hands on that key, they can open the door, take a bunch of your cash, and disappear. And if you don’t report your missing cash fast enough, you could be on the hook for all of it, according to the Federal Trade Commission.
However, the FTC says if your credit card number is stolen, you’re not responsible for any of the charges on your card. And if your physical credit card is stolen, the most you can be on the hook for is $50.
For security reasons and more, here are five situations where you never want to reach for your debit card.
1. When booking travel
This is where many credit cards are designed to shine. Credit cards routinely offer perks like:
- Travel insurance
- Rental car insurance
- Bonus points for booking travel
- Hotel and flight upgrades
The list goes on. And if your travels are taking you abroad, many travel rewards cards waive foreign transaction fees and still provide your normal protections while out of the country. Check the perks your travel card has or check out our list of best travel cards to get in the game.
Ready to upgrade your travel credit card game? Check out the travel cards our experts recommend to maximize your rewards.
By now we’ve all heard a horror story about online shopping. Your buddy thought the website was a little sketchy, but went ahead with the purchase anyway, because the deal was just too good to pass up. The next day he checks his bank account to see that $500 was spent at a Walmart six states away.
If you act fast enough, your debit card can offer you protections. Or you can sleep well at night by using your credit card at checkout, giving you peace of mind that you’re protected.
3. When making large purchases
While it’s a good idea for us all to spend within our means, sometimes we have to make big purchases. Whether it’s a new mattress, TV, or refrigerator, you might want to keep your debit card holstered for these types of purchases.
If your credit card is new, it might offer an intro period of 0% interest that will allow you to pay off your big expense without penalty. But major credit cards also tend to have:
- Purchase protection: If your package gets stolen or your item arrives damaged, this perk usually has you covered.
- Extended warranties: Some major credit cards extend manufacturer warranties, which can save you from costly repairs.
4. When building credit
Building credit is necessary, but can be tough to accomplish. Luckily, secured credit cards, student credit cards, and entry-level credit cards can help — debit cards don’t build credit. Your credit score is important, and maintaining healthy credit habits keeps your score high.
Use your credit card for small purchases or have a dedicated weekly or monthly expense on your card. Be sure to make regular on-time payments, paying your balance in full each time. This builds a positive credit history and keeps your credit utilization low — two keys to maintaining a high credit score.
5. When rewards are at stake
The rewards are one of the main reasons people use credit cards at all — so be sure you’re taking advantage of them! Credit cards routinely offer additional perks and cash back on different categories of purchases like:
- Dining out
- Grocery shopping
- Gas
- Travel
- And more!
Never spend more than you can afford to pay off each billing cycle, but review your card’s terms and make sure you’re using the right card each time to maximize your benefits. Don’t leave rewards on the table by using a debit card.
