![]() Some checking accounts pay an enticing interest rate on the balance, as well as refund out-of-network ATM surcharges if you use your debit card several times a month and meet other requirements. And when you pay with a debit card (as with a credit card), you can track your spending by eyeballing your monthly statement. If you like the convenience of paying with plastic but prefer to spend within the limits of your bank balance, you probably tend to reach for your debit card when you’re at the register. A history of on-time payments on a credit card helps boost your credit score - and a high credit score qualifies you for the lowest interest rates on mortgages and other loans. If you think you’ll lose control of your spending with a credit card, consider keeping one around and using it, say, only for gas or other regular purchases that don’t tempt you to overspend. (Late payments also hurt your credit score.) Plus, if you pay your credit card bill late, you could be hit with a penalty as high as $41. Retailers may pass on fees of up to 4% to customers who use Visa or MasterCard, as long as such businesses clearly post their policy and don’t run afoul of laws in several states that prohibit the practice. Sometimes you’ll pay additional fees if you use a card. And in the next billing cycle, you’ll incur interest on new purchases starting on the date you make them. If you don’t pay your bill in full, interest will kick in - typically on any unpaid portion of the balance. But unlike cash or debit cards, balance transfer cards can bring real peace of mind when interest rates are high. You’ll still have to pay a fee for the transfer, often around 3% of the total transfer amount. If you have racked up debt on another credit card, or if you have a high-interest loan that you could pay off in 15 to 21 months, then balance transfer credit cards may give you relief. If you find an error on your credit card bill - say, a duplicate charge or one for an item you never received - you have the right to dispute the charge and withhold payment on it until the card issuer resolves the case. If you report any credit card lost or stolen before any unauthorized charges appear, or if only the card number - but not the physical card - is stolen, you’ll have no liability. And card networks American Express, Discover, MasterCard and Visa all have zero-liability policies that protect credit card holders in case of fraudulent purchases. If a thief gets hold of your credit card or card data, you have stronger legal protections than with a debit card. Best yet? You can get bonus deals worth free flights or hundreds of dollars just for signing up for some of these cards. Frequent travelers may choose to use travel rewards credit cards that earn points or miles that are redeemable toward flights, hotel stays and other travel-related purchases. Some of the best cash back credit cards can get you between 2% and 6% back on supermarket purchases, gas and everyday spending. ![]() A big plus is the potential to earn hundreds - or even thousands - of dollars in rewards each year. ![]() The Credit Card Advantageįor disciplined spenders, credit cards have the edge. With payments becoming more complex and varied, you have much to consider. And since peer-to-peer (P2P) payment methods like Venmo and prepaid cards are on the rise, you'll find them here too. We've outlined the benefits and pitfalls of each to help you choose the best payment methods for you. How Do Credit Cards Work? APR, Interest and Fees Explained And more consumers are relying on rewards credit cards to offset the rising cost of travel and shopping. You can fork over hard cash or a check, swipe or tap a debit card, or use a payment app. ![]() These days, your payment options usually boil down to paper, plastic or digital. Should you rely on credit, debit, or cash to manage your finances? Each method has pros and cons. Your best bet is to use a combination that meets your own needs. Credit or debit? Cash? Each payment method has pros and cons.
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