Benefits of Credit Cards Over Debit Cards

For many young adults, a debit card is their first foray into plastic spending. Still, one can get by on a debit checking account for only so long; soon enough, establishing a credit history will become unavoidable for the budding consumer. Luckily, there are a number of attractive credit card offers available to pursue.

A credit card helps build a person’s credit history and score, which will come in handy when planning for large expenses and applying for loans. A line of credit can also extend a person’s emergency fund, as they’re not limited by the amount of cash immediately available in their checking account.

When reviewing a loan application, lenders use a person’s credit score to help decide the amount they are entitled to borrow and on what terms. Using a credit card responsibly, and paying off the balance statement each month, will build up that score. Having a strong credit score unlocks a multitude of financial benefits, like extending the credit available to the cardholder, making them eligible for cards with greater credit lines and entitling them to lower interest rates on loans. 

Consumers demonstrate their creditworthiness by responsibly using a credit card. This can make a huge difference when it comes to larger expenses. For instance, a better credit score could mean saving thousands of dollars in interest when taking out a mortgage.

Credit cards are also covered by much stronger consumer protections than debit cards. The Fair Credit Billing Act (FCBA) protects credit card users from unfair billing practices, fraudulent credit transactions and incorrect payments. Provided the consumer notifies the creditor in writing of any incorrect transactions, the creditor is required by law to cover the cost. 

Furthermore, as credit is essentially a loan rather than a sum of cash, misused or stolen funds can be restored within a reasonable amount of time. With a debit card, it can take weeks to rectify fraudulent transactions.

Credit cards are also easy to replace, which can be especially useful on an overseas excursion. Should a credit card be stolen or lost, the user’s credit line can be reinstated almost immediately when reported to the lender. Credit cards can also serve as an emergency travel fund. Whereas debit cards limit the cardholder to the account balance, a credit line can be extended in certain urgent situations, depending on the card issuer.

In the end, credit cards present a number of distinct advantages over debit. Building credit is a wise move when applying for loans or planning for large expenses. On top of that, credit card consumer protections are distinct in their breadth of coverage. It’s simply a matter of finding the right card for you.