5 Reasons I Always Pay With Credit — Never Debit
- I never pay for things with a debit card because I prefer to use my credit card, where I always get back the equivalent of 2% or more on my purchases.
- Credit cards also offer better protections, less liability for fraud, and more leverage with merchants.
- As far as I’m concerned, there’s rarely a reason to pay by debit.
- See Business Insider’s picks for the best rewards credit cards »
Nothing makes me cringe more than going to stores and restaurants with my friends and staring at them. pay cash or debit card. Or worse, when the occasional person pulls out a checkbook again and writes a personal check, carefully noting their purchases in the ledger as the line piles up behind them. Fortunately, many businesses no longer accept checks, but all still accept debit cards (and sometimes even offer cash back).
To me, using a debit card is a violation of being a smart consumer 101. Here are the top five reasons why you should never pay with a debit card:
1. You are more responsible for fraud
If the merchant’s card terminal is hacked, it could drain your entire bank account, taking weeks or months to recover. In the meantime, you won’t have money to pay rent, bills, and other necessities. Meanwhile, if fraudulent activity occurs on your credit card, your liability is limited to $50 by law (and most card issuers waive this, reducing your liability to zero).
2. You won’t get any credit card protection on your purchases
With the exception of Citi Cards (Citi has removed most purchase and travel protections from its cards), the majority of premium credit cards offer some form of additional protection on purchases. These can include extended warranty protection, protection against damage or theft, and more. The specifics of these protections vary depending on the specific card product, so see your card’s benefit statement for details.
3. You leave money on the table
For everyday purchases, you should get at least 2% back, because you can get 2% cash back on a card with no annual fee (like the Citi® Double Cash Card (which gives 1% on purchase and an additional 1% on bill payment) or the Fidelity Rewards Visa Signature Card). With premium travel credit cards offering rewards points when you spend in bonus categories, it is not uncommon to earn much more.
I earn an effective minimum of 4.5% (or more) points on travel (after using the $300 travel credit) and restaurant purchases with Chase Sapphire Reserve®, as I spend the points while traveling. In some states, it’s about the same percentage as sales tax!
4. You lose leverage with the merchant
If you have a problem with a credit card purchase and the merchant refuses to work with you, you can charge the purchase to the credit card issuer. Simply the threatens this will give you substantial leverage with the merchant, as they risk losing their merchant account if this happens too often, and their merchant processor will charge them large fees if you follow through.
Most of the time, if you have a legitimate dispute, the bank will support you rather than the merchant and your purchase will be refunded to you (you will not have to make payments on the amount in dispute while the resolution process is ongoing ).
5. You don’t get an interest-free grace period
On most cards, if you start with a zero balance, you’ll have up to a month before you have to pay off your credit card balance without incurring interest. This is an extra month when your money is available to earn interest in a high yield savings account or otherwise work for you. Credit cards are a great way to balance your expenses with your cash without paying interest for this privilege.
I hope I have convinced you: using your debit card to make purchases is an amateur gesture. Does that already still make sense? Yes he can. Some merchants (like marijuana dispensaries) do not accept credit cards, but do accept cash and debit cards. In this case, you won’t really have a choice. You may also get a discount for using a debit card instead of a credit card, like at some gas stations. If you’re willing to take the risk, the savings could add up. And of course, you might need cash at some point and make a small purchase with a debit card in order to get some cash back.
However, paying with a debit card should be the exception rather than the rule. A rare exception. Using a credit card is almost always preferable.