Credit or Debit? You are asked that question every time you make a purchase with your plastic card. Does it really matter whether you use a credit card or a debit card? You might be surprised to learn that it does. Here are several things to consider when you make your next purchase:

•  The level of protection for credit and debit cards is often identical. However, credit cards are federally mandated to limit your liability in the case of fraud or identity theft. When a debit card is used for a transaction, the funds are removed from your account immediately. Your stolen funds will eventually be refunded, but it could take several days and affect your bank account balance or cause checks to bounce. You also need to promptly notify your bank of debit card fraud or you may lose your chance to recover the loss.
•  Making a purchase with a credit card gives you flexibility when it comes to paying for something that may arrive broken, substandard, or “not as advertised” especially with on-line shopping. You can dispute charges with your credit card company and request a refund or charge-back for the purchase. The Fair Credit Billing Act protects credit card holders but does not apply to all debit card issuers.
•  Many credit cards offer extended warranties or additional protection on purchases especially electronics or appliances. It may extend the manufacturer’s warranty or even provide insurance protection in the case of damage or theft.
•  You can improve your credit score and build credit history by making regular payments on a credit card account. A debit card is just like writing a check and does nothing to improve your personal credit score.
•  Many credit card companies pay rewards for purchases made with their credit cards. These can include frequent flyer miles, cash back or earned prize programs, discounts on services, rebates, or hotel credits.
•  Using your credit card for large purchases can help grow your future purchasing power if you are responsible with the payments. It may result in a better credit score and higher credit limit. This is valuable to have if you ever need financial help to purchase a large appliance, car down-payment, or cash advance.
•  Most car rental agencies still require a credit card. You may pay your bill with a debit card but they will not use the debit card as proof of your financial ability to pay.

Be sure to take your financial matters seriously. You will carry your credit history with you for a long time and it can determine future purchases and buying power. Strive to be a responsible consumer.