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When should you use a credit card instead of a debit card? | Eyewitness Wants to Know

Credit cards offer more security and rewards, but experts say there are some situations when using a debit card is better.

SAN ANTONIO — You have a choice when it comes to paying with plastic:  Credit or debit. How do you choose which one is best to use? For most purchases in-store or online, use this:

“In most cases, a credit card is your best choice over a debit card and the biggest reason for that comes down to security,” said Matt Schulz, a senior credit analyst with LendingTree.com.

Here is why:  Your debit card is tied to your bank account and that could mean major money missteps.

“If a bad guy gets a hold of your debit card, they can get access to real money in a real account and can cause you some real headaches,” said Schulz. “Yes, you’ll probably get that money returned to you pretty quickly, but the truth is that if you have that money missing for a little while and bills comes due, it can cause some real stress.”

There is one place you should always use a credit card:

“Gas stations in particular are places where a credit card is the best move,” said Schulz. “That’s simply because the technology at a lot of gas stations isn’t up to par with what you see in most retailers.”

Credit cards also provide some other big benefits debit cards do not.

“If you do most of your purchases with a debit card, those aren’t contributing to all towards your positive credit history, not even a little bit,” said Nathan Grant, a senior credit analyst with CreditCardInsider.com. “It just doesn’t get reported to credit bureaus. You actually can build credit by responsibly using credit cards for the purchases you make every day.”

Credit cards can also give you a short-term financing plan if you pay them off monthly.

“There is some time between when you made that purchase and when the payment is due that you have a little flexibility,” Grant said. “You’re not getting charged until that point.”

Plus, credit cards offer some extras debit card do not: Rewards.

“If you’re somebody who likes that cash back, who likes those points and miles, and those free hotel nights, there’s no comparison,” Schulz said. “Credit cards is definitely the choice. There are some debit cards that give you rewards, but they’re never going to match what you can get on a credit card.”

Credit cards also give you more flexibility when you travel. Many hotels and car rental agencies put a “hold” on your cards, limiting access to the money you can spend.

“That’s basically freezing some of your money until you check out,” said Grant. “It limits the spending power you have on vacation.”

Smart money move: Choose your debit card if a vendor charges you a fee to use credit.

“We’re seeing more and more places now that are charging people a little extra if they want to use a credit card,” said Schulz. “That would certainly be an instance in which you’d be smart to consider using your debit card.”

Be aware that mistakes with credit cards can be costly and negatively affect your credit score. So know yourself and know if you have a tendency to overspend.

“The one advantage of debit cards have over credit cards is that it forces you to not spend money you don’t have,” said Grant. “You know, it’s your money tied directly to your checking account.”

“If you’re somebody who just doesn’t feel comfortable with a credit cards, whether you don’t feel like you can manage it or you just feel like you wouldn’t be able to resist the lure of that available credit, it’s OK to not get a credit card,” Schulz said. “If you make mistakes with credit cards, it can cause you some real trouble.”

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