Know when to use credit over debit.
While there are some consumers who caution against ever using a credit card, there are others who promote putting purchases on credit. The reality is credit cards play a significant role in society and when used properly, can help you build your credit. The trick is knowing when to use your credit and when not to.
If you struggle with finding a balance between using your credit card and using your debit card, here are a few helpful suggestions:
When purchasing items online
It is increasingly common to purchase things over the Internet, whether it’s a new shirt, a movie ticket or a home entertainment system. Everything can be found online these days. And you might think that your credit card should be limited to large purchases, but the truth is that purchases of all sizes online should be done using a credit card. Why? Simply for security.
Credit card companies monitor the use of your credit cards, which makes it easier for fraudulent activity to be spotted. According to lifehacker, credit cards companies have “zero liability” policies in place to protect you from unauthorized purchases. When dealing with debit, your liability can vary from bank to bank.
“Find the balance between using your credit card and debit card.”
When traveling
It is advantageous to use your credit card when traveling for several reasons. First of all, if checking into a hotel room, you will be asked for a card to cover any accidentals and costs. If you provide a debit card, the extra amount for incidentals will be frozen and then returned to you, limiting your spending capabilities until you check out, as noted by CreditCards.com.
Additionally, it is not uncommon to run into unexpected expenses while traveling. Plans don’t always go as intended, so having a credit card handy can allow you a bit more freedom in uncertainty, according to Credit.com. Knowing you have this freedom with your spending (though it is important to not go overboard) can help you stay relaxed and less worried during your travel as well.
When you can earn points
Depending on the credit card you use, you may be entitled to points or cash back bonuses. These can pertain to gas or travel miles or a plethora of other extra items. Even if the purchases are small, it’s wise to use your credit card on these items in order to see more come from it. Even if you have the cash available to make the purchases outright, sometimes it’s worth putting the purchases on credit to earn the rewards.
After so many months of earning rewards, you will be able to cash them in or continue collecting them, aiming for a large payout further down the road.
There is such a thing as healthy debt, and that is debt you are in control of. Use your credit card for purchases when it makes sense. When done the right way, using a credit card can build your credit score, allow you flexibility in your spending and help you earn rewards you can use for the future.
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