5 Expert Reasons to Ditch Your Debit Card

Top five reasons to choose credit over debit.

May 11, 2014 at 11:50AM

Your debit card may work a lot like a credit card, but there are a few important distinctions that can make a world of difference. We asked some top experts in personal finance why they choose credit over debit -- here are their top five reasons.

Extra consumer protections
It's fairly common knowledge that most credit cards these days give you options to protect against fraud, but that isn't the only consumer advantage to buying on credit.

"Some credit cards also have benefits such as extended warranties, purchase protection and rental car insurance," says Beverly Harzog, financial expert and author of "Confessions of a Credit Junkie." "It's important to read the fine print so you understand the rates and fees, but you also might discover a lot of benefits and perks you didn't know you had."

Growing your credit score
There are a few proven ways to improve your credit score, and buying on credit is one of them. Smart credit use can demonstrate that you're a worthwhile risk and help attract better rates from lenders.

"If you pay your bills as agreed and on time, that's usually the biggest factor in a score, and using less than 30 percent of your credit limit helps you," says Lee Gimpel, co-developer of financial education tool The Good Credit Game. "Conversely, if you don't pay your bill on time . . . you really hurt yourself with respect to your credit score."

So while it's true that you have to spend on credit to pump up your score, it's important to be careful. You'll see higher numbers in no time if you keep your balance below 30 percent of your limit and never miss a payment.

Easier budgeting
Financial planning can mean a lot to keep track of, but credit cards can help shoulder some of that burden. When every transaction you make shows up on your monthly statements, it can be easier to stay on top of where your money goes.

"Using credit cards for everyday purchases can be a great way to keep record of your spending, particularly for budgeting, cash flow management and tax preparation," says Miranda Reiter, founder of financial planning firm She & Money. "When consumers use one or two credit cards for everyday spending, it takes the guesswork out of where their money is going when it comes time to take inventory of their finances."

Rewards, rewards, rewards
Debit card rewards were fairly common as recently as 2010, but after a few years of shifting regulations you'd be hard-pressed to find one these days. Luckily, though, issuers are still turning out rewards credit cards that can help you get more bang out of just about every buck you spend.

It's important to choose the best credit cards for your personal circumstances, says Harzog.

"If you spend a lot of time in your car, focus on cards that offer excellent gas rebates," she suggests. "If you travel a lot, maybe an airline miles card would work for you. You want to match your lifestyle and expenses to the right card or you won't take advantage of the rewards. If you make a good match, you can actually profit from your cards."

Minimizing risk and playing it smart
There isn't any question that credit cards have their upside as personal finance tools, but it would be unwise not to address the potential dangers.

"Consumers need to be aware of the amount they are charging," says Gail Cunningham, National Foundation for Credit Counseling vice president of membership and public relations. "Ideally, a person would not charge more than they could pay in full when the bill arrives, [or else] the interest and annual fee associated with the card may override the reward benefits."

Ultimately, debit card spending is great training for smart credit use. If you just use your credit card like a debit card -- keeping track of how much you spend and never going beyond the amount you have on hand -- you might be a credit expert yourself in no time.

This article 5 Expert Reasons to Ditch Your Debit Card originally appeared on WisePiggy.com.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

You may also enjoy:

When are the best and worst times to apply for a credit card?

Find the right credit card to suit your needs

5 signs you're ready to upgrade your credit card

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers