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Choosing between a credit or debit card may not seem like a big deal. Beware. If your account is hacked, the difference in how much you can lose is huge.
Debit and credit cards look alike. Yet, a key difference is how they work. A debit card removes money from your bank account, while a credit card adds the purchase amount to your line of credit.
If you typically use a debit card, it’s time to rethink how you pay. Credit cards are safer, don’t tie up your bank account with “holds,” and offer you perks. You can earn valuable rewards using credit cards and even get an interest-free loan in the form of a 0% intro APR offer. Debit cards can’t do that.
By law, you are only responsible for $50 of unauthorized use on a credit card. And, these days most major credit card issuers have $0 fraud liability.
If a cyber-thief drains money from your bank account through a stolen debit card, it’s difficult to get it back. If you take more than two business days to report debit card fraud you could lose $500. If you take more than 60 days, your entire bank account is at risk.
If you lose your credit card, simply call the company and they will mail a replacement. (Some companies will even overnight a new card for free). It’s no contest. Credit cards beat debit cards hands down in terms of safety.
Using a debit card to pay for a hotel or rental car can be costly. Hotels typically put a “hold” on your debit card (and that means your bank account) to cover the estimated balance for your entire stay, plus taxes, fees and incidentals. The amount on hold is often higher than the amount you spend.
After you check out, that hold can stay on your account for up to a week. You may think you have enough money to cover a debit card transaction, but the hold could mean you are overdrawn. You could be declined at the register. Or, your bank could hit you with a big overdraft charge.
Rental car companies do the same thing. When you rent a car with a debit card, a hold is placed on funds in your bank account for the rental charges, plus an extra deposit which can be $200 to $300. If you return the car late or damaged, the rental agreement typically authorizes the rental car company to withdraw money directly from your bank account to cover those costs.
Credit cards don’t lock up funds in your bank account.
The banks are fighting harder than ever to win customers and are offering substantial rewards to win you over. Do you want cash-back, miles or points for travel or long 0% intro interest? You get to choose.
Credit cards are a great way to build your credit history. Your credit score can determine the rate you pay on a mortgage or car loan. The higher your score, the better your terms. The only way to build credit is to use credit. Using a debit card doesn’t help build your credit score.
If you’ve got a big purchase coming up that you need to finance, there are credit cards that offer long 0% intro interest periods. That means you can make a big purchase and take up to a year or even longer to pay off the balance without worrying about interest piling up. Debit cards can’t do that.
Credit cards offer valuable perks including rental car insurance, first checked bag flies free, or purchase protection policies. Some cards also offer an extra year of warranty protection when you pay with your card. Debit cards can’t do that.
If you pay with debit cards, it’s time to make the switch to credit. Even if you already have a credit card, there’s a good chance you can get a much better deal. Choose a big cash sign-up bonus, 2 miles per every dollar spent or over a year of 0% interest.
We’ve done the research. Here are the top credit card offers available now.
This $0 annual fee card makes a big splash as Discover rewards travelers with one of the most lucrative sign-up bonuses available. Discover will match all the miles you've earned at the end of your first year. For example, if you earn 30,000 miles, you will automatically get 60,000 miles. This first-class card offers you unlimited 1.5 miles for every dollar spent on all purchases - with no annual fee. With the sign-up bonus, that means you will earn 3 miles for every $1 you spend during your first year, which is an incredible rate for a $0 annual fee card. Your miles won't expire. No blackout dates, fly any airline, any time. No foreign transaction fees. Enjoy a long 0% intro for 14 months on purchases with this card in your wallet. The ongoing APR is 11.99% - 22.99% Variable after that. That means you have over a year to pay off a balance with no interest payments piling up.
Best for: This card offers the best first-year travel sign-up bonus. It’s hard to beat.
You earn up to an unbelievable 10% cash back in your first year with this card in your wallet. Here’s how. You will earn an extremely high Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically. At the end of your first year, Discover will match the cash back you’ve earned throughout the year. That means, if you earn $150 in cash back in your first year, Discover will match it, making your total cash back for the year $300! Log into your Discover account each quarter to activate the 5% cash-back bonus. Then pull out this card to pay for these popular categories including wholesale clubs, home improvement stores and even Amazon.com and Target, during that quarter. With your sign-up bonus in the first year, you will take home an incredible 10% cash back on category spending. This card has $0 annual fee.
Best for: If you are willing to activate spending categories quickly online each quarter, you can earn one of the highest cashback reward rates available today with this card.
Get peace of mind when you pay with credit cards. Thousands of Americans already enjoy the safety, rewards and savings they get from the above cards. Why not you? Apply now.
*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.