My father-in-law just booked an $8,000 vacation — through a travel agent. (Honestly, I didn’t even know travel agents still existed.)
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But that’s not the wildest part — he paid for the whole thing with a debit card.
I know better than to tell my FIL how to handle money, so I kept my mouth shut. But on the inside I was screaming, because not only did he just forfeit hundreds of dollars in credit card rewards, but he also missed out on potential travel insurance. If anything goes wrong on the trip, there’s very little recourse without insurance.
Here are three situations when paying with a credit card is a far better choice than a debit card.
1. Booking travel
Booking flights, hotels, or vacation packages with a debit card is a rookie move. You should always use a travel rewards card. Here’s why:
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Credit cards offer rewards, like cash back, points, or miles. And most travel cards have a higher earning rate for travel bookings, like 5% of the cost of a flight.
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Trip protections are often built in. Many travel cards offer trip delay reimbursement, lost luggage coverage, and rental car insurance.
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Included travel perks — just by using the right credit card, you could get hotel upgrades, flight status upgrades, or even airport lounge access.
Take my father-in-law’s $8,000 trip. Had he used a travel rewards card earning 5 points per dollar spent, he could’ve banked at least 40,000 points. This could be worth about $400 or more towards his next vacation. Also, if there’s a flight delay or issue, his card’s insurance might’ve kicked in.
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2. Major purchases
Thinking of buying a new laptop, fridge, or Peloton? Skip the debit card and use a credit card.
Many credit cards come with:
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Purchase protection against damage or theft within the first 90 to 120 days
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Extended warranties that tack on extra coverage past the manufacturer warranty
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Easy dispute processes if the item shows up broken or never arrives
Let’s say you drop your new iPad two weeks after buying it. If you used a credit card with purchase protection, your card company might pay for a repair or replacement.
Extended warranties can be a life-saver, too. For example, one of our favorite cards offers amazing protections for shopping (and travel!), including extending the manufacturer’s U.S. warranty by an additional year. Read the full card review and details here.
3. Online shopping
Fraud is way more common online. And while both debit and credit cards offer some fraud protection, the difference is in how fast and how well things get resolved.
With debit cards, any fraudulent transactions hit your bank account immediately. It can take days or weeks to get refunded, and meanwhile you’re out of pocket.
With credit cards, you’re not liable for fraudulent charges (thanks to the Fair Credit Billing Act). You can easily dispute shady transactions before money comes out of your bank account.
If you spot fraud, act fast
No matter what card you use, it’s always a good practice to check your transactions regularly.
If you see something weird, call your bank or card issuer ASAP. They’ll put a lock on your card to stop more charges and help you file a fraud report.
Debit cards have their place. But for travel, online shopping, and big-ticket buys, credit cards come out on top with better rewards, better protection, and more peace of mind.
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