As much as I’d like to give myself a cool title such as “certified deals and bargain master”, I am the furthest away from considering myself a financial advisor or an “expert” in any capacity. However, I am pretty certain about these 3 things: 1.) I have lots of credit cards, 2.) I pride myself on having pretty awesome financial habits and organizational skills, and, most importantly, 3.) I
like love traveling with points and miles.
When I share point #1 with others (having lots of credit cards), 9/10 times, I get looks of horror. “Credit cards are B-A-D news”, they say. Responses like that make my blood boil, because for many years, I’ve had a pretty darn rewarding relationship with my plastic, thankyouverymuch. Sigh, some people just don’t “get it”.
I’ll admit that when I came across the graph below (which I found on TBB), I was shocked, but at the same time I “got it”. 51% of non-cash transactions last year came from the use of debit cards. Ouch – all I can think about are the billions of unearned points and miles.
Call me a harsh person, but I can’t help it – I
judge cringe, when I see people use debit cards on a day-to-day basis. Yes, I “get it” that people have various reasons for doing so, but assuming they are financially responsible to begin with, why not earn valuable rewards and build credit at the same time?
Over the last few decades, credit cards have been slapped with a bad reputation because of how easy it might be to rack up massive amounts of debt. This post is not intended for people who spend outside of their means or don’t use credit cards properly to their advantage. I would never recommend a points-and-miles-earning card to anyone who can’t pay their bills on time and in full each month because the fees and consequences outweigh any kind of travel-reward benefit by any means.
The Case of Target
By now, it’s safe to assume that we are all aware of Target’s recent security breach, and numbers have climbed from 40 million affected to a whopping 70-million people affected.
Sadly, many people who have unfortunately suffered from fraudulent charges and compromised account information were debit card users. While it’s safe to assume that most who were affected will be let off the hook for unauthorized charges, debit card users are already facing bigger headaches simply because consumer protection laws view debit and credit cards differently.
Banks Care About Their Money More Than They Care About Yours
It’s a fact that debit cards offer consumers fewer rights in the case of unauthorized purchases, come with a much greater risk of being responsible for potential liabilities, have much longer dispute resolution times, and less purchase protection (if any).
In the case of credit cards, when an unauthorized charge is reported, it’s often credited back to your account immediately, and a provisional credit is issued while the bank investigates the potential loss of their money. On the other hand, debit cards deal with your money. Let’s face it – banks care about their money more than your money, and that’s why it can take up to two weeks for the bank to conduct their own investigation about the fraud before reimbursing your account.
In the case of lost or stolen debit or credit cards, federal law caps off the total potential losses to a maximum of $50. However, in the case of debit cards, you must notify the bank within two days of the loss or theft of the physical card in order to qualify for the “protection” (you have 60 days to report an unauthorized charge if just the number is stolen) or else you could be responsible for up to $500 in fraudulent charges, regardless if they’re yours or not.
I <3 My Credit Cards
In general, credit cards offer far more consumer-protection benefits that I’m sure most of us in the points and miles world have used at one time or another. For instance, I broke my iPhone twice, and Chase was able to save me. American Express also offers a very generous “no-questions-asked” 90-day purchase protection plan. I’ve gone through my own experiences just months ago when I discovered fraudulent charges on my Chase Sapphire Preferred, and Chase handled it like a pro. I feel good knowing that the credit card companies “have my back” in sucky situations that are out of my control.
Relevant to the travel world, a good number of Chase products offer a pretty sweet trip delay/cancellation protection benefit, and I never ever shill out extra money for rental car/auto insurance policies because my American Express Platinum card automatically comes with a great coverage policy when I use the card during booking. The list goes on and on…
I know that any kind of financial discussion is like opening a can of worms, and I know very well that people will always have different views on their payment preferences all together based on their individual scenarios. This post is solely my opinion on why I will always choose a credit card over a debit card until the end of time.
The floor is open to discussion…