As the holiday shopping season approaches, you’ll need to decide not only what to buy, but how to pay for it as well.
In the credit card and debit card debate, supporters on both sides have good reason to take one method and reject the other.
The biggest benefit offered by a credit card is security.
Under the Fair Credit Billing Act, if someone fraudulently uses your card number, federal law limits your liability to $ 50. And many credit card companies extend their protection beyond that. American Express, Discover, Mastercard and Visa take full responsibility for unauthorized purchases.
The protections of the law are especially important if you are shopping online. If you use your credit card to make a purchase and you have a billing issue with a merchant, including a dispute over unsatisfactory merchandise, the credit card issuer should investigate and resolve your complaint, and you can suspend payment until then.
In addition, credit cards may offer other protections, such as extended warranties and purchase protection, said Ted Rossman, analyst for Bankrate.com.
Credit cards also have generous rewards programs. Depending on the card, you can earn up to 5% cash back (or, typically, five points per dollar) for your groceries, gasoline, dining, and travel expenses. Some cards earn up to 3% cash back on every purchase you make.