When it comes to spending your money, you have a few options. Deciding which piece of plastic to use can be a hard decision, but my vote is always for credit cards. Although both have pros and cons, overall credit cards financially make more sense.

1. Using a Credit Card Comes with Perks

One big benefit of using credit cards is the rewards they offer. Many credit cards have reward programs, such as cashback, travel points, or frequent flier miles. These rewards can be earned by making purchases with the card and can be redeemed for a variety of perks, such as free flights, hotel stays, or merchandise. Additionally, credit cards also offer benefits such as purchase protection, rental car insurance, and extended warranty coverage. Some credit cards also provide additional perks like access to exclusive events, airport lounges, and concierge services.

If you had a debit card, you would be spending the same amount of money, but without the perks, a credit card can offer.

2. Credit Cards Help Build Your Credit Score

One of the main benefits of using credit cards is that they can help increase your credit score. A credit score is a number that represents your creditworthiness and is based on factors such as payment history, credit usage, and length of credit history. When you use a credit card, the lender reports your activity to the credit bureaus, which is used to calculate your credit score.

If you use your credit card responsibly and make payments on time, it will have a positive effect on your credit score. A good payment history is one of the most important factors in determining your credit score. Additionally, keeping your credit usage low—i.e. not maxing out your credit limit—can also help to improve your score.

3. Credit Cards Can Protect You Against Fraud

Another important reason credit cards are better than debit cards is the added protection they offer in the event of fraudulent transactions. When a credit card is used fraudulently, the consumer’s money is not stolen, the bank’s money is. On the other hand, when a debit card is used fraudulently, the money is taken directly from the consumer’s bank account, making it more difficult to dispute the charges and get your money back. By law, the bank must give you a temporary credit if their investigation lasts longer than 10 days, but being without your money for those first 10 days can be brutal! Furthermore, credit cards often come with built-in security features, such as chip technology and fraud monitoring services.

4. Credit Cards Can Provide Refunds for Damaged or Undelivered Goods

Another significant benefit of credit cards over debit cards is that the law provides more protections for credit card use than it does for debit card use. For example, if goods that are ordered online arrive either damaged, non-conforming, or don’t arrive at all, a consumer that used a credit card is entitled to a refund. However, a consumer that used a debit card would not be able to get a refund, minus some specific exceptions.

5. Credit Cards can Help in Emergencies BUT BE RESPONSIBLE!

Credit cards also offer more financial flexibility than debit cards. They allow consumers to make purchases they might not be able to afford with cash or debit. This is especially useful in emergency situations when a consumer may need to make a large purchase but does not have the cash on hand.

Of course, it’s important to use credit cards responsibly. Carrying a balance from month to month can lead to high-interest charges, and using too much credit can hurt a consumer’s credit score. But with proper management, a credit card can be a valuable tool for managing money and protecting against fraud.