For Mark Roberts’ Use: 

When you’re standing in the checkout lane, the option to pay with a credit or debit card may seem like a completely random decision. In other cases, your budget may dictate which card you choose. But even though these cards look identical next to one another in your wallet, they each offer different benefits and liabilities. Knowing how to use credit and debit to your advantage is essential to sound money management.

Debit cards are tied to your checking account, with funds deducted straight from the account when you swipe the card. Debit is the best choice for those who need to discipline their spending; you can’t spend more than you have and rack up enormous debts. Debit cards are more convenient than writing checks, but some users miss the ease of accounting when they flip through their checkbooks to track expenses. Establish an online account with your bank, and you can do virtually the same thing online.

The drawback to debit cards is the liability for fraud or theft. If you report a missing card or stolen card numbers within two days, your liability is limited to 50 dollars. However, after that period of time, the liability rises to 500 dollars for losses reported within 60 days. Therefore, it is extremely important to keep an eye on your cards as well as your bank balance.

Credit cards allow you to make purchases on credit, making them idea for larger purchases when you don’t have the cash on hand to pay outright. Of course, the drawback to this form of spending is that many people have discipline problems, and get themselves in over their heads. If your card carries a high interest rate, you could end up paying for more for a purchase than it was originally worth.

The great thing about credit cards, when used responsibly, is the possibility of various perks related to your card membership. These vary by credit card company, but may include cash back on purchases, airline miles, or zero percent interest on balance transfers from other accounts. If you’re a disciplined card user, these perks can actually save you quite a bit of money over time.

With credit cards, your personal liability for fraudulent use is limited to 50 dollars. Some card companies even cover 100 percent coverage in the event of fraud. They are required to investigate any claims you make, and to withhold merchant payments until the problem can be resolved. You may also enjoy purchase protection on damaged and stolen items, making credit cards a safer payment option for items like car rentals.

There are advantages and disadvantages to both types of plastic, but the important thing to remember is always keep an eye on your account statements. Report any suspicious activity immediately, and keep a copy of your bank’s 1-800 number separately from the card in case of outright theft of the card itself.