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April 2012
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Which card should you use: Debit or Credit?

When’s the last time you wrote a check? If you’re like most people, checks are a thing of the past and you’re using either a credit card or a debit card for the majority of your purchases, online or in person. But, if you use the two types of cards interchangeably, you could be inviting problems.

The safest bet is to know which card to use in different situations. Here are some helpful hints.

Use your debit card:

For convenience
Why? Carrying a debit card is a lot safer than carrying a lot of cash and quicker than writing checks. A debit card is great for smaller, everyday purchases. But, be sure you don’t spend more than you have in your account, or it could end up costing you.

For controlling your spending
Why? Because a debit card withdraws money directly from your account, checking your balance frequently (via online or mobile banking) provides an instant peek at how well you’re managing your money. Remember, when you pay by credit card, you’re spending future money, and interest on top of that if you don’t pay the balance in full.

For easy “cash back” and ATM cash withdrawals
Why? Using your debit card at the grocery store (where you can usually even get cash back) or ATM is as easy as pie. (But, pass them right by if anything about the machine seems suspicious. Crooks have been known to “hot wire” machines in order to steal your card information, PIN included.)

Use a credit card:

When purchasing items such as a television, electronics or other big-ticket items
Why? The money comes straight out of your account when you pay by debit card. Pay with a credit card and, if there’s a problem after the sale, you can dispute the charge and, by law, the credit card company will pursue the matter. On the other hand, a debit card transaction means the money has left your account; it’s up to you to resolve the problem and get your money back. Meanwhile, that money is no longer in your account.

When you’re buying online
Why? A debit card is connected directly to your bank account. If the seller turns out to be less than reputable, or the site is a hoax, you could lose much more than the cost of your purchase.

When you’re dining out.
Why? This is one time when you offer your card and it leaves your sight — and leaves you, and your bank account, extremely vulnerable.

When you’re paying “in advance”
Why? Hotels, car rental agencies and self-serve gas stations take your card information upfront, but traditionally “block” a larger amount than you’re expecting to pay – just in case you end up spending more! This “blocking” freezes that amount of money in your account, reducing the total you may have counted on access to for other purposes. The “block” may remain in effect for days.

When you’re trying to build up your credit history
Why? Debit card usage has no effect on your credit history or credit score. Using a credit card and paying your balance in full and on time can help build a positive credit rating.

One final warning. Whether it’s a debit card or a credit card, be sure to cancel it immediately if it’s lost or stolen. And, if you notice anything suspicious about your account, contact your bank or the issuer of the card as soon as possible, to prevent further damage.

Although it’s just a little piece of plastic, each card represents your hard-earned money. We want to help you keep it safe.