Many consumers own both credit and debit cards, but may not know when to use one or the other. Because there are differences in how debit and credit cards are processed, here are 4 scenarios for when to use a credit card over a debit card.
1. Shopping Online:BBB receives thousands of complaints every year from consumers who purchase items online and never receive them. Federal regulation generally requires an item to be delivered within 30 days, but using a debit card will make a refund more difficult to get. A credit card will allow you to dispute the charge, if it is more than $50, up to 60 days from the purchase date and give you a better chance of getting your money back.
2. Paying Deposits Upfront:Many contracts for home improvement projects or subscription services require down payments followed by regularly scheduled payments. Many times scammers try to take these deposits and disappear so using a credit card will allow you to recoup those lost funds.
3. Setting Up Automatic Payments:Service providers such as gyms, cell phone companies, cable providers and utility services offer consumers the option of setting up automatic deductions on their account. The goal is for you to never forget to make a payment, but billing mistakes can be made by a company’s computer system causing you to pay more. Instead of money coming directly from your bank account with a debit card, you can catch the mistake on your credit card bill and without money ever leaving your account.
4. Planning Travel Arrangements:Most consumers book hotels and/or rental cars well in advance, but they can place holds or deposits on your account for hundreds of dollars as a security deposit. If you use a debit card, this money will be taken out of your account immediately and you run the risk of over drafting if you are not careful. Using a credit card however can make this additional charge unnoticeable for at least 30 days and give you time to cancel should your travel plans change.
