Paying with Plastic: Debit vs. Credit Cards
Rick Emerson, author of Zombie Economics, stopped by with important information about credit and debit cards.
When it comes to paying with plastic, there’s an avalanche of options. How do you know which card is right for you? (And if you’re getting a fair deal?) How many cards is too many? And how do you keep track of all those different airline miles, anyway?
If you want to have your bases covered, a single card from each of the big-name companies (MasterCard, Visa, AmEx, etc.) should be enough to give you options in most situations (and locations), while still being manageable.
2) When it comes to credit versus debit, how do you know which card is right for the situation?
• Online payments. While both debit and credit cards usually have a liability limit for fraud, credit-card companies themselves actively monitor for suspicious online spending, meaning it typically gets spotted faster. With a debit card, it’s often up to you and you alone to notice anything amiss.
3) For those who are rebuilding their credit (or just starting to use credit) are secured cards a good idea?
Secured cards can definitely help restore battered credit…or establish credit if you’re just starting out. For this reason, parents will often create a secured credit card for college-bound children. Typically, the user puts down a flat payment (say, $500), which becomes the card’s credit limit. From then on, the drill is the same as most cards: keep your balance low, make your payments on time, and your credit score will slowly improve.
Some things to remember:
A good place to start is with . They track almost 600 different rewards programs, and while there are some gaps (they don’t cover some of the airline plans, for instance), it’s a great way to get a handle on a lot of what you’ve earned.
There’s an incredibly useful smartphone app called Wallaby. When you’re out shopping (or at a restaurant), Wallaby uses your location to tell you which of your cards offers the most points at that particular business. It says, “Hey, you’re at Nike Town, use your AmEx”, or “You’re at Whole Foods, use your Visa”. Wallaby is available for both iPhone and Android.
5) When it comes to frequent-flyer miles, what’s the best way to make the most of them?
Finally: many of the major airlines (including Delta, United, and Southwest) will be drastically reducing the value of their rewards miles later this year. If you’ve got miles built up, check to see if you’ll be affected. If so, you might want to use them before they drop in value. You can find out more about this at Credit.com.