We often hear that too much use of credit cards — as opposed to debit card use — is a sign of household budgetary woes, and eventual drowning under unmanageable interest.
And when credit cards are used simply to “borrow money,” during times of economic distress, this may well be right. But this week comes two different articles, one on the Nerdwallet website, the other on NASDAQ’s, espousing both the frequent and judicious use of credit cards. Not to pile up debt, but rather, to reap the rewards and actually manage household “money” better.
At NerdWallet, columnist Sean McQuay opines that “I Always Pay With a Credit Card, and You Should Too.” Among his primary reasons are that “credit cards, which are accepted just about everywhere these days, offer:
*Ways to earn big rewards with every purchase.
*A means of floating debt for more than a month — or longer — interest-free.
*Zero liability for fraudulent purchases.”
And he points out, while “Credit cards and debit cards look the same… they handle fraud differently. Suppose your debit card numbers were skimmed when you paid at the self-serve gas station. Even if you noticed the theft right away, the funds would still be missing from your checking account until the bank got around to reimbursing you. That could be weeks later. If you don’t notice any unauthorized purchases on your account until two months later, the bank wouldn’t be obligated to reimburse you at all.”
But aside from initially more secure protection against skimming or fraud, McQuay lists lots of other reasons, like cash-back offers and travel rewards, depending on the card.
NASDAQ continues those themes with its own piece on “How to Save With Credit Cards Beyond Points and Miles.” They expand on the protections in the debit vs. credit discussion: “If your debit card is lost or stolen, federal law mandates that if you report unauthorized charges within two business days the cost to you will be minimal. If you wait any longer, however, you may be held liable for up to $500. The same is not true of credit cards. If your information is stolen, most issuers will remove any disputed charges so long as you report them within 60 days. Legally, you will not be responsible for more than $50 of the total purchases made by the fraudster.”
But they also cite additional perqs, including trip insurance (which is often applicable to rental cars), as well as price and purchase protection — all depending on the card, of course.
But McQuay, again, stresses that it’s not about going into debt: “When you’re spending what you normally would, credit cards get you something extra in return. Until your debit cards and cash can do the same, credit is the better choice.”
Of course, sometimes there are reasons to just use debit, and spend what you have, but either way, your business needs to be ready to take payment cards, online and off, with EMV protection in your store or kiosk, so that customers won’t need to deploy those “fraud protections” after all.
And with summer here, and more travel afoot, customers will be saying “charge it” more often. So let one of those “benefits” be to your business — more sales, with the added convenience.