Most young adults interested in saving money are told to avoid using credit cards for purchases, and instead to only make purchases when they have excess cash available in their checking or savings account. It’s generally good advice, especially when credit limits are set to entice spending – even among users who don’t have the wherewithal to carry debt with high monthly interest fees on unpaid balances. While that advice continues to be sound, there are advantages to using a credit card when you are able to pay off the full balance every month, and there are disadvantages to using debit cards for certain payments.
Many credit card companies and banks offer consumer protection from fraud, guaranteed refunds for returns, and replacement warranties for faulty or misrepresented merchandise when items are purchased by credit card. In contrast, in-store and online debit payments or transfers may not enjoy the same benefits, as they are widely considered cash withdrawals or transactions under the sole discretion of the account holder. Ultimately, any consumer capable of paying off all monthly credit card dues will enjoy better protection – and potentially be able to accumulate loyalty points – as long as they are cautious about avoiding late fees and interest.