Whenever you shop online, don’t use your debit card. You should always make your online shopping purchases with a credit card. Why? There are a few reasons for this.
It’s easier to dispute a charge (aka a “chargeback”) and get your money back with your credit card. Especially, when you do it before your next billing cycle.
When it comes to debit cards, it is much more difficult to dispute transactions. The money has already been sent to the seller and will need to be transferred back to your account. You will have to negotiate with the seller to make this happen, and they may not give you what you want.
If you happen to use your credit card on a site that’s not properly secured, and your card number gets stolen, you won’t be responsible for any unauthorized transactions made afterward. Credit cards often offer $0 liability for unauthorized transactions. In the worst-case scenario, you will be liable for only $50 worth of unauthorized transactions. A debit card will not offer the same level of protection in cases of theft and financial fraud.
Some credit cards offer extended warranties for electronics that you purchase with them. An extended warranty increases the amount of time that the user has coverage for the manufacturer’s warranty. A manufacturer’s warranty covers the costs of repairs and replacements caused by manufacturing defects. This will not cover cases of accidental damage, theft or loss.
Your credit card might offer cash back or rewards points whenever you make transactions. It might even offer more rewards when you shop at select retailers. Find out what your card’s select retailers are and see whether they pique your interest.
When you use a debit card, you’ll have clear spending limits. If you go overboard with your spending, you’ll reduce the amount of money you need for your monthly expenses, like your utility bills and your groceries. Or worse, you can diminish your entire account balance and push it into the negatives. This could lead to problems like overdraft fees, NSF fees, late fees and bounced checks.
It’s very likely that you have more available credit sitting on your credit card than funds sitting in your checking or money market account. So, you won’t feel as limited with your spending when you use a credit card.
Spending freedom isn’t always a good thing. If you get overzealous with your shopping, it could lead to consequences.
You shouldn’t charge transactions to your credit card that you can’t afford to repay by your next billing cycle. If you do, this can create a slippery slope of repayment problems. When you can’t pay the transactions off by the due date, the remaining balance will sit on the card and accrue interest. The longer that you take to pay it down, the more interest it will collect and the more you’ll have to pay.
When your shopping habits rack up a high balance on your credit card, you leave yourself with less credit for more important purchases—like emergency expenses. Your credit card is an excellent safety net for times when you’re hit with an urgent, unanticipated expense that your budget can’t handle, like a sudden plumbing repair. You can charge the expense to your card and work to pay it down over time.
With a high balance, you might not be able to depend on your card for that important purpose. If you need to borrow funds to cover an emergency expense, you could try to apply for an online loan. With an approved online loan, you could use borrowed funds to cover your emergency expense in a short amount of time.
Online loans should only be used for emergencies. Don’t use them for everyday expenses. You should get a better idea about how much does it cost to borrow before making this financial decision.
Reaching the Limit
If you’re not careful, you could rack up a balance that is far too close to the limit. You might even max it out. Maxing out your card doesn’t just cut off your access to credit. It comes with consequences, like lowering your credit score.
Don’t leave your credit card sitting in your wallet when you go online shopping. You’ll definitely want to use it to cover your purchases.