Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
I recently wrote about the convenience of debit cards as well as one potentially major downside. In short, while I’ve seen the light with regard to the ease of use of debit cards under certain circumstances, I’m still a credit card devotee. Why? Read on to find out.
1. Fraud protection. While many debit card issuers promise fraud protection on par with credit cards, including limited liability, fraudulent activity typically results in an investigation before the questionable charges are eventually reversed. Would you like to have your bank balance tied up while things get sorted out?
2. Rewards. While some debit cards offer rewards of various sorts for making purchases, the most generous programs are generally tied to reward credit cards.
3. Building a credit history. It’s hard to build a credit history without actually using credit.
4. Freedom to borrow at 0%. You can make a killing using 0% balance transfers to get your hands on free money that you can then stick in a high yield online savings account. Just make your minimum payments and then kill it off before the 0% period ends. The interest that you earn is yours to keep, free of charge. Check out my guide for making money from 0% balance transfers.
5. No holds on your hard-earned cash. I brought this up in a recent post about excess hotel charges, but… Whenever a merchant (e.g., a gas station) decides to place a hold on your funds, your otherwise spendable cash will be locked up until they decide to release the hold if you made the mistake of using a debit card. If you had used a credit card, on the other hand, they’d have just locked away a portion of your credit line.
So there you have it… Five reasons why credit cards are better than debit cards. If you have any more to add to the list, please leave a comment. Or if you happen to disagree, feel free to poke holes in my arguments.
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