Credit: Debit Or Credit?
BOSTON (CBS) - When you go to pay for something do you hand the cashier your credit card or your debit card?
Folks who use debit cards will tell you they use them because it's like using cash. They don't over spend. Which may be true except most debit cards do have overdraft protection. So you easily can over spend.
My preference is to use a credit card. I believe there are some distinct advantages to using credit. A good article, 10 Reasons Why Credit Is Better Than Debit, appeared recently in the AARP newsletter.
I believe the number one reason to use credit is the fact that there is limited liability if a thief gets hold of your credit card number and goes on a shopping spree. You will be liable for only $50. With a debit card it's up to $500 and a clever thief can wipe out your checking account.
Then there are the points. Use them for travel or cash back. I must admit I like the cash back feature of my card. Every month the credit card company makes a deposit into my granddaughter's 529 college savings plan.
We talked about credit scores earlier this week, using a credit card can improve your score simply by paying your bill on time.
If you find yourself disputing a charge it is almost impossible to get your money back from a merchant with a debit card. But use your credit card and you can actually hold off paying the card until the dispute is settled.
When you rent a car your credit card may offer some insurance coverage and some cards offer trip cancellation coverage.
Also, your credit card may offer your FICO credit score each month.
And credit cards are accepted most everywhere including the gift shop in Antarctic, but not so debit cards.
And there is the float. You can charge something today and not have to pay for the item for many weeks. Your bill comes in 2 weeks and then you have 3 weeks plus to pay it.
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You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
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