Debit or credit: Which should you use to pay? Experts say there’s no one-size-fits-all answer. So here’s what you need to know about your options, starting with when it’s best to use a CREDIT CARD:

  • Pay with a credit card when you want to build credit. In order to get the best interest rates on a mortgage or car loan, experts say you need to have a good credit score. And one of the easiest ways to do that is to build up a credit history – by using a credit card, and then paying it off on time. In fact, even if you only use your card once a month to charge something small – like a lunch – that’s enough to build a strong credit history.

  • You want to protect your purchase. Because when you charge something to a credit card, most issuers automatically throw in insurance, and an extension on the manufacturer’s warranty – which you may not get on a debit card.

  • Use a credit card if you’re worried about fraud. Because if your wallet’s stolen, and a thief uses your credit card to buy something, you can’t legally be held accountable for any purchase over $50. But with debit cards, unless you report a problem within two days, you may be on the hook for any amount withdrawn from your account.

So, when is it better to use a DEBIT CARD?

  • If you tend to overspend. After all, when you can’t actually “see” the money you’re spending, it’s easy to get carried away and rack up huge charges that may be difficult to pay back. But with debit cards, you can only spend what you have in the bank.

  • Use a debit card if you generally prefer cash. Because with a debit card, you can always get cash on-the-go at the nearest ATM, usually for free. But with credit cards, you have to worry about paying fees on each cash advance, plus interest.