Credit or debit?
Before being asked at the checkout which type of plastic you're using, ask yourself the same question. Credit cards and debit cards operate differently, so it's important to understand the benefits and protections offered on the cards you carry and use.
When it comes to small, day-to-day spending, go with the card that works for you, says Carrie Culbertson, a share draft and card service specialist at Dupaco's JFK branch.
But there are other times when a credit card is your better option. Here are four times when you should use credit over debit:
- Travel purchases. Many travel-related merchants, including car rental services, hotels and airlines, will authorize for a higher amount than what you're actually spending to account for incidentals and potential problems. Eventually, the posting transaction will be corrected. But if you used a debit card, the higher authorization will affect your available checking balance until then.
- Big-ticket items. Any time you're spending a large amount, use your credit card, especially if you regularly use your checking account to pay bills. While a debit card immediately withdraws money from your checking account, credit cards afford you time between when you make the purchase and when your bill is due. "That way, if there is a problem and the merchant needs to issue credit, you aren't short on your checking account while you're waiting for the error to be corrected," Culbertson says.
- Travel benefits. Some credit cards, like the Dupaco VISA, offer free cardholder benefits, including travel accident life insurance and disability, emergency assistance and car rental insurance. "Check to see what kind of benefits your credit card offers in regards to traveling. A lot of times it's something you forget you have," Culbertson says.
- Warranty benefits. Before purchasing something that comes with an optional extended warranty, find out whether your credit card offers additional no-cost warranty protection. Some credit card companies offer that service to their cardholders.