Ask Andy: Debit or credit?

By Andy Wise - bio | email

MEMPHIS (WMC-TV) - The cards fan in your wallet like a hand of 5-card draw.

The cashier asks, "Debit or credit?"

How you play your hand depends on two things:  discipline and safety.

Consumer Reports said if you're disciplined enough to pay off your credit card bill each month, you're safer using your CREDIT card...

* FOR LARGE PURCHASES.  This includes any purchase online. Credit cards offer built-in protections where you are never liable for more than $50 in a disputed charge. Most cards these days offer "zero liability" as a feature to attract customers, so you're not liable for any portion of the purchase.

This comes in handy if anything goes wrong with that pricey lap-top. Or let's say the retailer's playing games with your dishwasher's warranty, or the store's suddenly gone out of business. In most cases, you can dispute the charge with your credit card company -- problem solved.

Also, some credit cards add a year to a product's standard manufacturer's warranty. Check your card's terms.

* FOR GAS, HOTELS AND CAR RENTALS. Gas stations, hotels and rental companies often put what's called a "pre-authorization hold" on debit cards. That can freeze a hundred bucks or more in your account for several days, and it might trigger an over-draft. So use credit on these instead.

* AT RESTAURANTS. I've covered many a story where a server's hidden a skimmer in his/her apron, swiped a customer's debit card number, then stolen the customer's identity.

NEVER use your DEBIT card at a RESTAURANT.

You should use your DEBIT card...

* FOR EVERYDAY PURCHASES. Small, regular purchases, like your groceries.

* FOR BUDGETING. Each debit is a line-item of what you're spending your money on, and you're less likely to overspend when you don't keep a wad of cash in your billfold.

One more thing about using your credit card:  if you carry one that has a great rewards program, then by all means, use that credit card to help you earn either cash back on gas or grocery purchases, frequent flier miles, whatever.

But obey my first rule in playing your hand:  discipline. Cash rewards on a credit card mean nothing if the cash ends up going to interest for carrying a balance.

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