4 Reasons Why You Should Use a Credit Card Instead of a Debit Card

Credit card use is on the rise. In Latin America, Uruguay and Chile are the two countries with the greatest rate of credit card ownership, 40 and 30 percent, respectively. And while credit card debt is definitely not something that you should be indulging in, using credit to make payments can be beneficial. This is because credit cards have certain perks that their debit counterparts do not.

While this may come as a surprise, buying things on credit is generally preferable to using debit cards, provided that you are responsible for your spending. Here are a number of benefits of paying for your purchases with a credit card, according to the lifestyle platform monederosmart.

Buy Now, Pay Later

Credit cards let you make purchases even if you do not have sufficient cash on hand. They also allow you to make repayment according to your means, provided that you meet the minimum monthly payments. On the downside, credit cards can also be a trap for those living beyond their means, so never make the kind of purchase you know you will not be able to pay off later.

Building Credit History

Credit reporting bureaus have a lot of information about you, including every loan you have ever applied for, paid up, or defaulted on. This information is used to calculate your credit score or credit profile.

Using your credit card responsibly affects your credit score, which means that if you want to take out a loan further down the line, the banks are more than likely to oblige. Some things that will play in your favor include holding multiple credit card accounts, making timely repayments, and having access to credit for a long period of time. And do remember that merely holding a credit card without using it will not get you an optimal credit score.

Protection Against Fraud

Credit cards usually come with a degree of fraud protection since they are separate from your checking account. Debit cards, on the other hand, draw funds directly from your account and transfer them to the vendor. This means that in cases of fraud, your money can be difficult to get back.

If somebody makes fraudulent charges using your credit card information, you can alert your card issuer to the situation, and the money is unlikely to be taken out of your account when it comes to paying your statement. Instead, your card issuer will freeze the card while they investigate the situation.

Credit Card Rewards

The days of debit card rewards are long gone. Today, it is all about credit cards. And the rewards associated with using a credit card can be very appealing. Some of the most common benefits of using credit cards include 1-5 percent cash-backs. Depending on the particular credit card, you can also use it to get special offers on flights and accommodation.

To make the most of your credit card rewards, always pay off your full balance on time since any interest you have to pay is likely to outweigh the benefits of the rewards. In addition, when getting your credit card, make sure that it is one with no annual fees.