Credit Cards

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A word of warning about debit cards....

If your debit card number is compromised and someone makes large purchases, your bank is unlikely to indemnify you. They are not required by law to do so. You will need to pay off whatever is overdrawn on your account before you can initiate a dispute as to whether or not the bogus charges were fraudulent.

On the other hand, if your credit card number is compromised, you can claim fraud immediately and not be required to pay for the bogus purchases. You are, however, required to cooperate with any investigation into the fraud. I recently had someone take several THOUSANDS of cash against my credit card in Kenya. After signing my notorized signature on a fraud affidavit, those charges were removed and I am not responsible for them.

My husband never carried cash and always used a debit card until I met him. I advised him of this potential problem with debit cards, so he agreed to become a joint user on one of my credit cards (we were living together but not married at the time). He actually did this to humor me, thinking that I was giving him inaccurate advice. However, he subsequently got a job as a software developer at a bankruptcy law firm and the attorney there confirmed everything that I said was 100% accurate.

Another thing to think about...

Edit: you can always get a prepaid credit card so you don't overspend, but they can charge some pretty insane account maintenance fees.

I cannot do credit cards at the moment. I am too much of a spender. I need to have the cash in my hands.

I'm too young to get one, plus I don't need one.

I do 95% of my shopping and finances online...so yes. I pay the balance in full each month.

If you plan on using them online...you may want to set up a fraud alert just in case...you'll be notified via email or phone if a purchase is made over a certain amount. Alot of the major credit card companies now offer programs that will generate a one-time use number for using online...a little more secure and less risky if a merchants database happens to get breached.

Alex: cash back may be nice, but it's the interest rate that really counts. Take a good close look at what you're getting back at the end of the month or year (however your card does it), and compare it against what you're spending on interest. Does the cash you get back warrant the higher interest you're probably paying? Or would you have been better off with a lower-rate card and no cash back?

I wanted to play Final Fantasy XI, but then I found out you need a credit card!

We pay for most things by credit card, but always pay off the whole bill each month.

If you do use credit cards, you need to be disciplined enough to live within your means & not allow interest to accumulate, or you can quickly get into financial difficulties.

We use a credit card backed by a large supermarket chain and so get loyalty points on everything we buy, even if it isn't from one of their stores. Last year the loyalty points paid for 3 weeks of holiday & an annual family-pass to a theme park.

So yes, if you choose your card wisely AND don't accumulate debt, then you can take great advantage of the offers.