Question of the Day: Debit or Credit?

Consider yourself in good company if you wonder what are the best situations to use a credit card in lieu of a debit card.  Daily Finance identifies several instances that you should always choose credit:

  1. Online purchases:  Credit card fraud is easier to fix than if someone drains your bank account with your debit card.
  2. Gasoline and Hotels:  Purchasing gas with debit card can lead to short-term hold of $50 to $200 (hotels) so if your balances are low this can lead to overdraft charges.
  3. Large purchases:  credit cards provide purchase protection if item is defective and also the opportunity to stop payment
  4. Dubious places:  if a retail establishment looks sketchy (and you still need to make a purchase there), it is easier to deal with fraudulent credit card transactions vs. debit card transactions.

So, why use a debit card at all?  Well, if you can’t control your spending then a credit card can become a weapon of mass consumption.


Check out the NGPF lesson on Picking a Payment Method.