Credit or Debit Cards?

The answer to this question is fraught with polarizing answers and depending on who you're talking to will determine what answer you receive. Regardless, I think it's worth writing about.

What does this look like? Some will say don't ever use credit cards because they're simply not worth it. Others will say that credit cards make it easy for employees to make purchases. I say that we have to look at the facts.

What are the facts? The following is by no means an exhaustive list, but rather a few points to consider.

  • For those that say the points are worth it, I have one word, really? In reality, most cards give 1% return in "rewards". That means for every 1000 dollars spent you get 10 dollars back... not a great ROI. And all of the people I've talked to recently haven't been very thrilled with the flight benefits.
  • Now, some credit cards do have other benefits, for instance protection for unexpected travel expenses (i.e. things like lost luggage), travel insurance, extended warranties, zero foreign transaction fees, etc. I traveled with someone recently that had the added benefit of TSA pre-check included on their card. When time is money, this is a great perk.
  • On the other hand, assuming that you've taken the necessary steps (making sure that there's enough cash in the bank) debit cards can be viewed as easier and more efficient. No card to pay off each month and this also means no potential for late payment fees or interest charges.
  • Given that the average person spends upwards of 15% more on a credit card is something that should also be considered in this decision.
  • Lastly, we could talk about fees, but it's definitely possible to find both a debit card and a credit card without monthly or annual fees so I'll nix this topic.

What to remember: This decision should not be taken lightly. While under certain circumstances, credit cards could be a strategic move, mistakes could mean late fees and a large amount of interest charges and no one wants to spend money on those things.