October 30, 2013
You have probably received advice on choosing debit cards over credit cards when making payment. It is undeniable that debit cards allow you to plan your finances better as you are making payment out of existing balance in your account instead of buying on credit.
What many people fail to understand is that, choosing between a credit card and debit card is more than a matter of whether payment is made on credit or not. There are many instances where using a credit cards is definitely the wiser choice. Here’s our list of top 6 situations where you should always use a credit card instead of debit.
Having a good credit score is very important. It affects your loan application, credit cards limit, and property purchase among other things. If you are just starting to build your credit history, getting a credit card and commit to good repayment behaviour for one year will give your credit score a good boost.
If you have bad credit and are trying to rebuild it, using your credit card whenever possible is a good way. Do make sure that you settle your outstanding balance promptly each month. To find out more about the importance of a good credit score, read our article here.
When shopping online, you should be cautious about scams, damaged goods or hidden charges. If you use your debit card for online shopping, it is way harder for you to get a refund later on. This is because the amount would have been deducted from your account at the time of transaction. Using a credit card is less risky in comparison, and it is easier for you to dispute the purchase later on.
With the expansion of online businesses in Malaysia, you should definitely learn to protect yourself online. Check out our article on how to prevent online crime.
When going on vacation, we often avoid bringing excessive cash on hand. Apart from being dangerous, you could lose some money from converting your money to foreign currency and back to ringgit afterward. A credit card would come in handy when travelling as it allows you to charge it on your card and pay afterwards when you return to Malaysia.
Depending on your card, you can get exclusive discounts and treat points too when you charge your overseas purchase, hotel bookings and flight tickets to your credit card. Frequent traveller benefits such as air miles and travel insurance are also good motivation for you to use your credit card instead of debit card when travelling.
A lot of credit cards in Malaysia offer cashback and treat points for retail purchase. Charging your credit card for that new couch or television is a great opportunity to make full use of the reward system. Make sure you check with the card issuer on the terms and conditions and participating merchants before making any purchase. Again, it is also much easier to get a refund later if there is any dispute with the transaction.
We do advise you to make sure that you are able to pay for the outstanding amount later. After all, you wouldn’t want all that savings you make from credit card rewards to go down the “longkang”.
Many of us have recurring charges that we need to pay on a monthly or annual basis. This could be your insurance, gym membership, or magazine subscription. Using a credit card to pay for these recurring charges is a good way to keep your bills in check. Plus, you earn extra treat points every month!
Sometimes membership fees can go up without you realizing, paying with a credit card will make it easier to keep track of it and raise a dispute when needed. If you pay using your debit card, the additional charges will still go through and you will have overdraft fees on top of the increased membership fee.
All in all, be it credit card or debit card, you can benefit from both if you know how to use them wisely. Check out our comparison page for the list of credit cards in Malaysia and the benefits they offer.