Should You Use Credit Or Debit Cards For Holiday Shopping?

Holiday shopping is underway for many with “Black Friday” and “Cyber Monday” already behind us.  One small question you might ask yourself is whether you should pay for your items with a credit or debit card. 

There's a lot of debate about whether you're better off using a credit or debit card because both have a few advantages and drawbacks. Some experts may recommend sticking to a debit card if you're on a budget so that you aren't tempted to spend more than you can afford, and then end up paying high interest later. Those are legitimate concerns and those who are trying to stick to a holiday budget should be mindful of how they spend their money. But there are several reasons credit cards can be a better option for holiday shopping.

Credit Cards Always Impact Your Credit Score

No matter what time of the year it is, you should always be taking a look at your FICO score and doing what you can to improve it. By using your credit cards and then paying off the balance in full after holiday shopping, you can enter the new year with a better credit score than what you had before, and perhaps in doing so set yourself to begin fulfilling a new year's resolution already. Remember, the higher your credit score, the lower the interest rates you can get for new loans or even new credit card accounts you might want to open.

Credit Cards May Come With More Perks For Holiday Shopping

While it is possible for debit cards to have rewards included in their program, credit cards usually have more rewards. For example, you might be able to get certain discounts for shopping at certain retailers, or get a certain amount of cash back if you purchase a certain amount of products. Many credit card companies even offer travel points if you fly with certain airlines, or even discounts you can apply when you book a hotel room. You certainly have to weigh the rewards against your budget, and you certainly shouldn't overspend just to redeem a reward. But if you can stay within your budget and get rewards for your credit card, why not take advantage of that?

Credit Cards May Have A Little More Security For Certain Purchases

The holidays are unfortunately a time for identity thieves to be at work trying to get a hold of financial information such as bank account numbers, and credit and debit card information. Depending on who your bank is, your debit card certainly can have many security mechanisms in place to prevent fraudulent charges from happening, but usually credit cards have even more security built into them. Many credit card companies have invested in high security mechanisms such as sending an automated phone call to the customer if the system detects an unusual charge to a credit card. Also, with laws like the Fair Credit Billing Act in place that are meant to mitigate fraud, you may be better off using a credit card since disputing fraudulent charges on a debit card may be more difficult.