what does everyone think on the topic of credit cards vs. debit cards when making purchases? and which situations do they each have their advantages/disadvantages?

normally I have been buying everything with my credit card but ONLY if i have the money in the bank to afford them. not only do I get cash back because of it, i gain interest on the money in the bank during the grace period.

the thought on this topic came up because I have a gym membership that automatically bills me monthly, and I'm having a hard time deciding whether or not to actually charge my credit card or debit straight outta my bank account.

 

I never use a debit card, especially for automatic transactions.

If there is a screw up with a debit card (say they charge you $1,370.00 instead of $137.00) they have YOUR money, and it's your problem to get it back. Naturally they won't pay you interest or the bounced check charges you incurred due to their error.

If you get in a dispute with them, they already have your money (and can instantly take even more of your money if they want to). You then have to a) Settle the dispute in your favor and b) get your money back. In this sort of situation you have far more negotiating leverage if they do not already have your money.

Credit cards allow you to dispute charges through the CC company...you don't have to pay until it is resolved, and the CC provider will back-charge the other party to reimburse you if necessary.

If you pay it off every month, and have a CC with some kind of rewards program, you'll be ahead of the game.

 

If you have the money available, a CC is the better way to go for the reason Rick said. Be careful, way too many americans are letting themselves get themselves in too far and can't pay it back.

I only have one CC, but I rarely use it...and it's only for real emergencies.

 

When I'm on the road for work, I use a specific credit card for EVERYTHING. I don't use it except for when I'm travelling. It works well for two purposes. First off, I only put business related expenses (food, transportation, supplies, etc) on it. At the end of the year, my monthly statements provide an excellent record of expenses for taxes. Second, it is very easy for me to spot anything "out of the ordinary" on my statements. I know what cities I've traveled to, and have had a waiter steal my number before in the past. It's very easy to go back and trace connections for eventual prosecution (at least it was for my case).

When I'm at home, I use my debit card, however I only use it for transactions where there is no other human interaction. I have a Bank of America VISA check card with the keep the change program enrolled. As far as I'm concerned it's free money (and pretty decent for simply spending). I'm not big on credit cards (although I have two- one for work and one personal), but at the end of the day the convenience of bank draft wins out.

The one time that I have had an issue with a fraudulent charge against my checking account, BOA credited back the money in 24 hours (over the weekend) and corrected all of the charges immediately as well. In the end I think it all comes down to your bank/credit card company and how they handle it.

 

flyerjosh, that is actually a really good idea to have one specific card for work. I dunno why I didnt think of that, but you're right that it's an automatic expense record for taxes.. plus it would help me budget.

 

As an added benefit, you can easily see if something "isn't right" on your statement...