Credit cards sometimes get a bad rap, but they are one of the best ways to protect your finances when you're shopping and traveling. How so? And when should you be sure to take out your plastic when paying? Here's the lowdown on credit cards' best uses.
Why Use Credit?
The biggest difference between a credit card and a debit card comes in the form of protection. Even with modern advances in anti-fraud technology, you still put yourself at risk every time you pay with a card rather than cash. But cash isn't convenient, and it carries its own risks when you're doing certain activities — like making an expensive purchase or visiting a strange city.
So, which type of card offers more protection? Credit cards, by far. Because the debit card is directly linked to your bank account, you could potentially see your hard-earned money drained before you can react. While you may get that money back, it may not be immediately. A credit card is only link to the issuer's coffers, so you might see fraudulent activity, but you can dispute it without suffering undue financial harm until it's resolved.
When Should You Use Credit?
This "zero liability" aspect means that you should stick with credit cards while traveling — particularly while traveling internationally. It's harder to detect fraud when traveling in a foreign environment, so you get automatic protection from your credit card company. The same applies when you shop online. This growing trend means that people are putting in their sensitive card numbers at more and more places, and risking more and more fraud hotspots. Using a credit card protects your bank account if anything goes wrong.
In addition to the fraud protection, some credit cards offer additional warranties when large items are purchased through them. This means you should pull out your credit card when purchasing expensive goods like televisions, appliances, travel arrangements, or electronic devices.
What Should You Do Now?
Clearly, a credit card is a valuable tool that you should have in your financial toolbox. If you don't already have a card to use in these circumstances, research for one with a low interest rate and low annual fees. There are a variety of perks and benefits like travel insurance, cash and point rewards, and upgrades. Choose what fits your lifestyle and use the best, and then head out knowing you're carrying financial protection for whatever life throws at you.