I posted this in another thread a few weeks back comparing debit and credit cards:
Quote:
Your Money: Credit beats debit in 7 frugal ways
By Marshall Loeb
New York —- It's a question we face daily that still leaves most of us mystified: "Debit or credit?" Here, courtesy of Consumer Reports' Money Advisor, are seven reasons to opt for credit:
Credit costs you less. Some banks charge for so-called in-store "PIN-based" debit-card transactions. Fees range from 25 cents to $1, depending on the bank, Money Advisor reports. By choosing a "signature-based" transaction, you sidestep these fees.
Credit won't result in a hold on your account. When you use a debit card to reserve a hotel, rent a car or even fill your tank, vendors sometimes put a "block" on your checking account until the transaction is processed —- and the amount of the block can significantly exceed the purchase. Using your debit card to buy $25 worth of gas, for instance, may result in $100 of the money in your account being "blocked." If you're running a low balance, this can result in punishing overdraft charges.
Credit makes it easier to cover your bases. If you haven't been keeping a close eye on your bank balance, it may be a good idea to choose the credit option on your debit card because it takes longer for the money to be debited from your account (usually around two days). This gives you a little time to make sure you have enough in your account to cover the charge.
Credit offers better rewards. While some debit cards now offer rewards, such as air miles and cash-back bonuses, credit-card rewards tend to be far more generous, according to Money Advisor.
Credit allows interest to accrue. If you religiously pay off your balance at the end of the month, you stand to make more money by paying with a no-fee credit card. Why? Because you can allow your money to grow in an interest-bearing account until your bill comes due.
Credit gives you an out. Using a traditional credit card makes it easier to reverse the charges if you get into a dispute with a merchant or vendor.
Credit shields you from liability. If someone gets hold of your credit card and wracks up a laundry list of charges, you're typically responsible for only $50 worth of fraudulent charges. If you're unfortunate enough to have your debit card stolen, you may be liable for as much as $500 in unauthorized purchases, unless you report the theft within two business days.
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I seriously dislike debit cards. Shrinkwrap is correct- you can start building good credit with a credit card. If you are disciplined with it, as you say you are able to be, and you pay off your bills each month, you get essentially a free loan between the time you make the purchase and the time you pay the bill. Get the credit card and be responsible with it. You will not regret it. My s. has excellent credit and is very responsible with his card. He has been so diligent with paying on time (pays electronically) that when he accidentally paid his last payment a few days late (he was out of town and forgot), he called them and they waived all late fees and penalties because he is already such a good customer!