Because you have several options for purchasing goods and services, it helps to
understand which method works better for certain situations. Don’t substitute this list of tips
for professional financial advice or credit advice. Always guard your credit information and
your cards to avoid identity theft or fraudulent use.
And remember that credit is not a
right; use your credit wisely.
Online Shopping
Use a credit card.
For online purchases, don’t use your debit card. Your debit card is linked directly to your
checking account. This means that your checking account is vulnerable to thieves using your debit
card number to clean out your account. In case of fraudulent use, your bank is likely under regulation
to limit your liability, but you will still have to endure the hassle of getting your balance restored
which might take some time.
And during that time you may experience other problems because the balance in your checking account
is not what you had expected.
Restaurants
Use a credit card.
Use cash.
Don’t use a debit card. The same rules apply here that are mentioned under Online Purchases above.
Fast Food Restaurants
Use a credit card.
Use a debit card.
Use cash.
If you are paying at the register when you order, use your debit card or cash.
Big Ticket Items
Use a credit card.
Shopping for furniture or expensive electronics? Most credit cards offer more consumer rights
should you have a dispute with the vendor. A debit card does not always offer these same consumer
rights. And if you already paid in cash, you don’t have any leverage if you have a dispute with the
retailer.
Some credit cards also offer extended warrantees. And in some purchases, such as buying electronics
or renting a car, some credit cards also offer additional property insurance to cover the item.
Deposits
Use a credit card.
This provides the store with its security deposit, and you still have access to all of the money in
your bank account. If you were to use cash or debit, you may have a dispute and unable to get the
deposit money back.
Recurring Payments
Use a credit card.
Imagine the hassle that might be involved with trying to stop a membership payment for something
like a health club that you no longer belong to. Now imagine the charges aren't going onto your
credit card, but instead coming right out of your bank account.
Another reason not to use the debit card for recurring charges is the bookkeeping aspect. If you
forget to deduct that automatic payment from your checkbook one month, you could be looking at
overdraft fees and embarrassment.
Future Travel/Purchases
Use a credit card.
If you use your debit card, you will be debited almost immediately even for travel or delivery in
the future. So if you're purchasing travel tickets that you won't receive and use for six months
or making a reservation for a few weeks from now, you'll be out the money immediately.
Also by using the credit card, you will have dispute rights that might not come with your debit card.
Hotels
Use a credit card.
Different hotels have differing policies so ask about their policy regarding deposits and holds
before you present your card.
Some hotels will place holds to cover them in the event that you may leave without settling the entire
bill. The holds or deposits can be for amounts in the hundreds to make sure you don't run up a long
distance bill, empty the mini bar or trash the room. Holds are almost unnoticeable if you're using
credit, but can be an issue for debit cards where your checking account may have only enough of a
balance to cover what you need.
Gas Stations/Grocery Stores
Use a debit card.
Use cash.
Some gas stations offer a discount for cash but not debit cards.
If you use your debit card, pay at the pump and select the PIN number option which should debit
only the amount you've actually spent.
If you don’t pay at the pump and don’t have cash, use a credit card. But be aware that some gas
stations might place a hold for more than the amount you requested in case you are one of those
customers who leaves without paying.
NOTE: Check the ATM before using
Take a good look at the ATM machine before using it. Criminals are getting better with skimmers,
so if there is something not right about the ATM machine or card reader, don’t use it. Even if this
ATM is on bank property, it might have been compromised. Also be aware of your surroundings when
using an ATM.
