Many people are shying away from credit card usage. A recent cover story in a recent Money section of USA Today (1) said, “Credit card use plunges as hard times drag on, debit use rises.” So credit cards are quickly falling in popularity. However there are some advantages to paying that extra % on borrowed money and there are many times where using a debit card is just foolish.
Online: No one should use debit cards online. Online is exposed to the world, your debit card is linked to your bank account. Your bank account is where all your money is. If you’re comfortable allowing direct entrance into your bank account, then go for the debit card online. However, especially for places you’re unfamiliar with or have not used much in the past, the debit card is just no-no online.
Hotels: I’ve worked in hotels for the last four years. People all the time are calling me disputing charges on their debit cards. what people don’t understand is that hotels will always authorize (or “hold”) a greater amount than what your end total will be. People don’t like getting a receipt that says “X” was taken from their accounts only to be told it’s “X plus whatever the hold was.” Credit cards are also generally a lot quicker about turning that around. In either event, a hotel is just another invite you don’t want to the party of your bank account.
Long Term Travel: Another complaint I hear all the time is a new reservation will come in for six weeks from now, made on a third party travel website or even our own property site. I’ll see the reservation come in and then soon after that I’ll get the call from the consumer. “Why did you take my money for this hotel purchase? It’s not for six weeks!” This is where I need to explain to the consumer that because they paid with a debit card and/or bought from a third party website, we didn’t take anything. The debit card is immediate payment so the money’s gone right away but the debit card is also immediate payment. So the money’s gone right away.
Big Ticket Items: When you’re buying something that runs upwards of a thousand bucks or more you probably want to use a credit card. Even something that’s a few hundred dollars is a big enough purchase for most of us. The implicit “credit protection” that many card users aren’t even aware they’re carrying is a great tool to use in the struggle of big purchases.
Restaurants: Every restaurant is different and there is no uniform standard. A restaurant may overcharge (“authorize”) your debit card by some degree, hoping you’ll leave a generous tip and you may. However many people don’t like to see more than what’s on their receipt gone from their checking account. Moreover when your wife gets ill, fighting the charges on her consume is far more difficult with a debit card than with a credit card.
Credit cards are merciless, they fear no one. There is a time for a debit card and a time for credit cards. As consumers we need to be able to parse the fine lines of exactitude in making that distinction.