To pay with credit or debit? That is the question.
According to Ted Rossman, an expert who joined WBBM Newsradio’s Rob Hart on the Noon Business Hour this week, credit is usually the right choice – here’s why.
“Credit cards offer better rewards they also offer better fraud protections,” said Rossman, an independent credit card analyst based in New York. “And we have to remember, a credit card is really the bank’s money up until you pay them back, whereas a debit card… that money is coming directly out of your checking account, and that has some real practical ramifications.”
For example, putting down deposits. When consumers use a credit card, a portion of their credit limit is what’s used to cover it, while a debit card payment could tie up actual money for days.
Swiping a card at a gas station could also tie up money for days, Rossman noted. He said that’s not the only reason to pay credit instead of debit when at the pump, since many stations have outdated card readers that could be targeted by fraudsters with card scanners.
Online shopping is another opportunity that calls for credit rather than debit, Rossman told Hart. In-person retail stores with chip readers offer some protection from fraud, but the internet is still the “Wild West,” he said.
“You type in your number, somebody could steal it, they can use it elsewhere,” Rossman stressed.
Regularly using credit cards also helps consumers build credit. These days, credit scores can be used for everything from getting a car loan or an apartment to applying for a job, according to Rossman.
“Even if you don’t think you're in the market for credit right now you probably will be before long,” he said.
