When it comes to protecting your money, it’s important to know that you should never use your debit card at certain key times. Although it seems convenient and fast, it can expose you to money blocks, fraud or charges that affect your pocket, especially if you live on a tight budget. Here we explain the situations you should avoid and why.
1. In hotels and car rentals
Hotels and car rental companies often place heavy holds on your debit card.. This can lock up a good portion of your money for days, even if you haven’t spent anything extra.
“Many hotels place a pre-authorization for incidental charges that can leave you without access to a considerable amount of your funds,” says Tim Doman, newly appointed CEO of TopMobileBanks.
That’s why, It is safest to use a credit card for these services..
2. For recurring payments
Automatic payments can generate unexpected holds that leave you without a balance. If a service charges in advance, the transaction could trigger an overdraft.
To avoid it, It is best to associate these payments with a credit cardbecause it does not directly compromise your available money and allows you to maintain control of the monthly flow.
3. Online shopping
Buying online with debit involves higher risk. If a site is hacked or your data is leaked, the money is deducted directly from your account. Getting it back can be slow, and during that time you won’t be able to use those funds.
Credit cards offer a stronger shield against fraud and they allow you to dispute charges without affecting your bank account.
4. To buy expensive items
Buying electronics, appliances or jewelry with debit leaves you without the protection that many credit cards offer. Besides, the process to claim for defects, returns or fraud is much more limited.
“Fraud protections on debit cards are much weaker than on credit cards,” said Robert Farrington, founder of The College Investor.
With expensive items, it is always a good idea to protect your investment..
5. When you have a low balance
If your balance is limited, a small charge can trigger several overdrafts in a row. These charges add up quickly and They can become a debt with the bank.
To avoid it, check your account frequentlymove money from savings before spending and ask the bank to reject purchases when you do not have enough balance. This way you avoid paying for errors that are easy to prevent.
6. At gas stations
Gas stations usually retain a high amount before allowing you to fill up with fuel.. Even if you only put twenty dollars worth of gas, The withholding can be much higher and leave you without access to the rest of your money for hours. Using a credit card eliminates that block, since the hold does not affect your bank account.
7. During international trips
Debit usually applies worse conversion rates and higher commissions in other countries. Additionally, an ATM or foreign business may retain more money than necessary.
To travel, The ideal is a credit card with no international transaction fees and use the debit card only for specific emergencies.
8. In businesses that charge extra fees
Some small businesses or service providers Fees apply for accepting debit card payments. To avoid overpaying, ask before paying or use cash if possible.
9. When you could earn rewards
Spending with debit means giving up points, miles or cash back. If you are already going to spend on supermarkets, gasoline or restaurants, you could obtain benefits that your budget will appreciate.
“Use a debit card instead of a credit card can cause you to lose valuable rewards“says Andrea Woroch, consumer expert at Best Life.
Taking advantage of the right card can not only help you save month after month, you can also earn other benefits.
10. When you need bank protection
If your card is stolen or someone clones your data, The impact on your account is stronger with debit. Although basic protections exist, they are more limited. With credit, your money never leaves your account while you solve the problem.
Protecting your financial stability means carefully choosing when to use each payment method. Although using a debit card may seem like a very convenient idea, there is a lot at stake with your money. The final general recommendation would be, as far as possible, not to use it, preferring the credit card or, failing that, cash.
You may also be interested in: