The Gen XY Lifestyle
Seven Reasons Why A Credit Card Is Better Than A Debit Card
We explore why you should dump your debit card for a new credit card…
It can sound pretty counter-intuitive to consider keeping a credit card over a debit card. Debit cards has been touted as the ‘safe’ choice, the option that you does not get you into any trouble with debt as it is linked to your savings account and when you use the card, money is deducted from the account.
And there are some good reasons to have a debit card in your wallet, some of which include enjoying the same acceptance and flexibility as credit cards, giving you convenience for daily and small-ticket purchases. However, using only a debit card for all your transactions means you might not be making full use of the options available.
With credit cards, it is important to be disciplined and regular with payments in order to avoid incurring any penalty fees as well as maintaining a good credit score.
Let’s look at seven reasons why you might want to have a credit card on hand.
- Debit cards do not have as robust rewards programmes linked to it
Many banks have somewhat addressed this and both credit and debit card holders now have access to a basic level rewards programme that helps with earning points and enjoying rebates and discounts.
However, the ‘better’ or more substantial (editor’s note: subjective) rewards are activated only with more premium or niche credit cards. For example, the Citibank Premiermiles card allows you to earn points to redeem frequent flyer miles with every dollar spent. And the points do not expire!
- Debit cards offers lesser protection than credit cards
Sometimes mistakes happen, but with debit cards, once the amount is deducted, it can be hard to prove. For example, if your card is stolen, and you don’t report this to your bank immediately, your protection against unauthorised purchases might be weak.
It can be highly inconvenient as you will need to raise a dispute with your bank on the charges to ensure that you are not left with someone else’s bill. The bank will investigate your claim and this can take weeks or months to resolve.
According to the Association of Banks in Singapore guidelines, your maximum liability when you report your credit or debit card as stolen should only be S$100.
- Credit cards means you can buy now, pay later
With the lemon law in effect, it helps that credit cards offer a certain protection in terms of being able to claim back refunds or raise a dispute with the merchant through the bank.
Buy now, pay later is also rather useful if you get reimbursed for company purchases. Most cards provide up to 30 days payment period from receiving the bill. This can be the time between submitting your claim and receiving the reimbursement.
- Credit cards give you the choice of flexible payments
You can use a credit card to pay for big-ticket items such as home appliances or services such as spa treatments, and pay for them in installments. Many banks have such services, for example, the POSB Everyday Card, that lets you select a loan amount within your available credit limit a well as the preferred repayment period (up to 60 months).
- Frequent flyers or travellers benefit with bundled travel insurance
There are credit cards such as the UOB Visa Signature card that offers bundled travel insurance that covers personal accidents, inconvenience, overseas purchase protection and even home protection (for when you are away). The bundle insurance is one way to save and to benefit when the unexpected happens while travelling.
- Go through your day without the need to carry cash
Many retailers and services are moving online, selling their products and services through an internet marketplace or through mobile applications (apps). Acceptance (without unnecessary surcharges) is also a given at many establishments in Singapore.
Taxi services are being provided by companies such as GrabTaxi and Uber.
Supermarkets such as NTUC and Cold Storage have launched their online stores with prices matching those found at retail. Challengers such as HonestBee and RedMart are offering different levels of convenience from home delivery to bulk discounts and more to get more customers.
Your credit card and profile stored with these companies make it realistic and easier to get through the day without having to hold onto any cash. Double the assurance that you can raise a dispute with the merchant if you are charged wrongly.
- You get to choose the card most appropriate for your lifestyle
Banks have gotten better at understanding both their customers and the customers’ spending habits. At OCBC, they have created credit cards for different groups ranging from frequent travellers to those looking for rebates as well as those linked to an association or membership and even for those looking for discounts at specific shopping malls!
The different cards offer many free and discounted privileges and treats, ranging from concierge services to dining deals to petrol rebates. These perks add up to help you save even more, despite using the credit card.
(Image source: AFP)
