Why Are Credit Cards Better Than Debit Cards? Explained

Cashless payments are on the rise for many compelling reasons, and we have seen quite a lot of the latest ways popping up to make payments easier. But still, credit cards and debit cards are the two most popular and widely used choices. And the good thing is they are still small plastic cards that fit in the same pocket of your wallet, having their own features and benefits. 

But the thing is, credit cards tend to offer a few more benefits than traditional debit cards. And in this article, we will tell you why! But before we move on, make sure that you check customer reviews before you get a credit card for your needs. Checking reviews will help you decide which credit card is best for you and which one is not.

Difference Between Credit and Debit Cards

Credit cards let you borrow money up to your credit limit, while debit cards are connected to your bank account and take money out of there. The primary difference between the two cards is their effect on one’s finances. 

Understanding differences can help people choose the best card for their financial needs and goals.

5 Reasons Why Credit Cards Are Better than Debit Cards

Safety from Frauds

Credit cards’ high level of security against fraudulent use is a significant perk. Most credit card issuers offer comprehensive security options, such as advanced encryption and real-time monitoring systems, to combat fraud. 

Zero-liability policies protect customers from any financial responsibility in the event of fraudulent charges. However, there may be fewer protections in place for debit cards, making them more susceptible to fraud. If your debit card is stolen, your money may be gone forever.

Credit Score

A credit card allows you to establish or improve your credit history. One of the most significant ways to maintain a decent credit score is to make timely payments and keep your credit utilization ratio low. Borrowing potential, interest rates, and loan terms improve with a high credit score. In contrast, using a debit card to make purchases does not add to your credit history because it does not involve borrowing money.

Points and Rewards

Rewards and perks programs that come with credit cards are often more alluring than what debit cards offer. By making regular purchases with a credit card, cardholders can earn various benefits, such as cashback, travel rewards, Airline miles, hotel stay discounts, and invitations to VIP events. By taking advantage of these perks, cardholders can further stretch their spending dollars.

Emergency Protection

Credit cards can protect you from financial emergencies. Credit cards can bridge the gap until other funds are available. Credit cards allow consumers to make large purchases over time with revolving credit. However, debit cards only use funds from the linked account, limiting spending flexibility and emergency backup.

Travel and Car Coverage Insurance

Travel insurance, including trip cancellation/interruption, lost luggage reimbursement, and emergency medical coverage, is often included with credit cards for frequent travelers. 

Many credit card companies in the USA offer collision damage waiver insurance for rental cars, saving travelers the cost of rental company insurance. These extra layers of protection can save travelers money. Just make sure to check reviews of the credit card company you are choosing so that you can know its features and benefits.

Conclusion

Credit cards offer numerous benefits over debit cards. Credit cards are a better choice for many consumers, from fraud protection to cashback rewards. However, managing your credit card use is crucial, making total payments on balances and avoiding accruing too much debt.