How To Decide Whether To Use Debit Or Credit

Mankind is plagued by several quandaries: Paper or plastic? Ketchup or mustard? Betty or Veronica?

While the answers to these questions may be easy: Plastic, mustard and Veronica, the decision of whether to use credit or debit is not. One method spurs ludicrous overdraft fees, the other ignites ridiculous interest charges. One keeps you honest by forcing you to spend money you have, while the other is more liberating because it lets you spend money you don’t have.

USA Today tackles the debate and understandably doesn’t find resolution. But it does comprehensively break down the pros and cons of each method and may help you decide which route is best for you.

The story asks you to consider the none of the above:

Brian Riley, research director for the TowerGroup, says consumers should pick the card that’s the best fit for their specific needs: convenience, low interest, fraud protection, rewards or even as a help in taming your inner spendthrift.

First step, though: Consider cash for the purchase. Cash is the simplest transaction and comes with no strings, fees or delayed costs.

Ah, so it was a trick question then.

But cash is hardly realistic in today’s society. Who wants to carry change? It’s just something I can’t believe in.

I’m a credit card man. As long as you keep tight control on your spending and pay off the balance every month, you can’t go wrong with magic plastic insta-debt. In addition, because of the way our laws are structured, credit cards give you bit more protection against fraud.

For example:
The Fair Credit Billing Act protects you from suffering damages due to unauthorized use of your credit card. If you report a lost or stolen card before anyone uses it, you are not responsible for any charges. If you do not report it before an unauthorized use you are liable for a maximum of $50.

Debit cards and ATM cards are covered under the Electronic Fund Transfer Act, and your liability depends on how quickly you report the loss. Unlike credit cards, debit and ATM cards can have unlimited liability in certain circumstances.

Debit or credit? Let how you spend decide [USA Today]
(Photo: The Consumerist)