Debit cards carry either a Visa or MasterCard logo, and with those logos users can enjoy purchasing power nearly anywhere in the world. They can do so with the satisfaction that they are not indebting themselves to card companies, or shelling out extra money for interest. But while these cards can double as credit cards (without some of the more troublesome features), they are not always the best selection when making certain purchases. Occasionally, credit cards are still the better payment method.

Each payment method has it’s pros and cons but when is it better to use one over the other. Let’s first take a look at each. Debit cards let you spend your own money and not borrow from the credit provider (at a high rate of interest) and are convenient to use and store.

Pros and cons of each

However, they also have some drawbacks:

• – They may not provide any rewards, benefits or perks that some credit cards offer, such as cashback, points, travel insurance or purchase protection.
• – They may not help you build your credit history or improve your credit score, which can affect your ability to borrow money in the future.

Credit cards on the other hand are a form of borrowing that lets you buy things now, and pay for them later. They’re potentially useful for emergencies, large purchases or spreading out the cost of something over time. But there’s also an array of risks, such as:

• – Charging high interest rates if you don’t pay off your balance in full every month.
• – Tempt you to overspend and get into debt that you can’t afford to repay.
• – Have fees and charges that add to your costs, such as annual fees, late fees or foreign transaction fees.

When should I use what?

So when should you use a credit card instead of a debit card? Here’s some example scenarios where a credit card might be a better choice:

When you want to earn rewards or benefits.

Below is a list of situations when it is better to use a credit card instead of a debit card:

• Scheduled monthly payments.
  If a debit user were to put their scheduled monthly payments on their debit card, they would need to track this recurring expense every month and ensure that their balance is sufficient to cover it. This can get tiresome and tedious, not to mention the headache that it can cause to the user if they do not have enough funds to make the payment in a given month. One way around this is to arrange such charges on a credit card instead. This way, the consumer can rest easily knowing they will have enough of a balance each month to float the expense and can keep their bank account free from unnecessary strain.
• Airline flights.
  Unlike hotels and rental cars, which use debit and credit cards to secure reservations, but do not charge the full amount until the stay or rental is complete, airline flights are debited immediately. This can be done because, unlike other reservations, there are no financial variables yet to be calculated during use and added to the final cost. This can work against the consumer who charges flights to their debit card. Not only does it eliminate a sizeable chunk of the user’s bank account, but it also limits their dispute rights and does not provide purchase protection insurance or flight cancellation insurance. In the event that the user cannot take their flights, many credit cards will reimburse customers with the amount of their tickets, or assist them in low or no cost rebooking. Such services are not customarily offered with debit cards.
• New store.
  This means either that the store has recently opened or the customer has simply never previously shopped with this particular merchant. It is always best for consumers to get a feel for a vendor before they trust them with their money. Fraud may not be involved, but incompetence can be, and a company or store may simply botch a purchase or the handling of the consumer’s information. To protect against this, as well as potential fraud, it is advisable for consumers to employ their credit cards when at a new store, until they build a working knowledge of its operations and trustworthiness. Not only will the user save the hard-earned money in their bank account from mishandling and fraud, but as stated above, credit card companies provide superior protections for recouping against loss of any kind.
• Improving credit score.
  Debit cards don’t build your credit score, but credit cards do. By using a credit card responsibly and making sure you meet your repayments on time, you can help increase your credit score and prove your credit-worthiness.
• Earning rewards points.
  While there are some debit cards that earn rewards, the big sign up bonuses and earn rates are reserved for credit cards. You’ll need to make sure that the rewards you earn outweighs any extra fees and interest. Make sure that you pay off your balance in full every month to avoid interest charges.

Of course, using a credit card instead of a debit card is not always the best option. You should always weigh up the pros and cons of each type of card before opening an account and choose the one that suits your needs and budget.