Your credit card and debit card function and look alike, but they provide different benefits. Credit cards work like a portable loan based on your credit line, which is a fixed amount you can borrow from the issuer and have access to repeatedly as you use and pay down your balance each month. On the other hand, debit cards are connected to your checking account, meaning money is taken directly from your bank account to pay the merchant when you make a purchase. Credit cards can work to your advantage when you use them responsibly and repay them on time. Here are a few reasons utilizing your credit card can benefit you:
- Built-in Fraud Protection: Protection against fraud is probably one of the top benefits of using a credit card for purchases. If a fraudster steals your credit card information and uses it for fraudulent purchases, you will not be responsible for those charges. Visa offers Zero Liability Policy that guarantees a cardholder won’t be held responsible for unauthorized charges made with their Visa credit or debit card. Also, the Fair Credit Billing Act protects credit accounts, like credit cards, from unauthorized charges.
- Safeguards Your Bank Account: By using your credit card on everyday purchases and reserving using your debit card for low-dollar purchases and when you need cash, provides an extra layer of security that safeguards your bank account. For example, if your debit card is compromised, thieves could access your bank account and possibly steal all your funds. While your bank will work to get that money returned quickly to your bank account during their investigative process, having that money missing even for just a little while could cause some real stress. When using your credit card for everyday purchases, you protect your bank account from possible major financial losses and headaches. Credit cards also provide some more flexibility when you travel. When using your debit card at places like hotels or car rental agencies, they put a hold on your card which limits your access to your cash in your checking account.
- Rewards and Extra Perks: Most major credit cards offer rewards and extra perks as benefits to their cardholders. You can get rewarded for everyday purchases when using a credit card with rewards that you can redeem for cash back, statement credit, travel and more. Even if your credit card doesn’t have rewards, you can take advantage of extra perks that are provided by your card issuer and network, such as Visa, like identity theft protection and travel benefits.
- Credit-Building Potential: It’s best if you are able to pay the balance in full each month, which would also save on paying interest. The longer you have your credit card account with a positive payment record, the more positive impact this will have on your credit score.
When deciding when to use your credit card vs. your debit card, you have a lot to consider. However, when using your credit card responsibly and repaid in a timely manner, you ensure you stay protected and get rewarded for your everyday purchases. Learn more about the security and perks of an Arvest Bank Personal Credit Card.