Advantages of Using Credit Cards Over Debit Cards?

Answer 1

With the country in financial turmoil, debit card use has skyrocketed. Debt-laden consumers have switched to debit cards to try and alleviate their financial burdens. However, the fault for credit card debt is not to be laid on credit cards themselves. Most debt situations arise from poor financial and spending decisions. In fact, there are several advantages that credit cards have over debit cards.

Safety

When consumers pay with credit cards, it is easier to avoid losses from fraud. Debit cards work by transferring money directly from a customer’s checking account to a merchant’s bank account. When debit cards are used fraudulently, the money is missing instantly. Credit cards, by contrast, offer some protection against fraud because the money stolen is not actually missing from any of the customer’s accounts. An additional advantage is that credit card companies handle all the details of fraudulent use. Debit card fraud may result in overdraft and insufficient funds fees, which in turn make creditors unhappy.

Grace Period

The instantaneous nature of debit cards reveals another advantage of credit cards: grace periods. With a credit card, money spent is not automatically deducted from your bank account. Instead it remains there for one to two weeks until you pay your credit card bill at the end of each month. If you pay your credit card bill from a high-interest savings account, the saved interest will eventually add up to a meaningful amount. Another advantage is when you pay with credit, you do not have to always watch your account balance to make sure it remains in the black.

Additional Benefits

Credit cards offer additional benefits to consumers that many do not realize they have. These benefits include enhanced warranties, insurance against damaged or defective goods, and points that can be redeemed for airline tickets, certain products or simply cash. These benefits are subtler but they provide a major benefit in that customers have the added convenience and protection of extra liquidity in emergency situations. In tough economic times, liquidity can spell the difference between survival and bankruptcy.

Credit cards are one of the most versatile financial instruments ever invented. Despite their bad reputation, they provide benefits to consumers and lighten families’ financial weights.