If you’re thinking whether to go for credit or debit cards, you should know when it is ideal to use them. Read through this article, which will help you decide when to use a credit or debit card.

Credit cards are useful for big-ticket purchases. Moreover, you can rely on credit cards for travel purchases, as card issuers offer travel insurance including reimbursement for replacing your lost luggage.

Some credit card companies offer coverage for collision, loss of use, etc. when you rent a car. This can save you money on your car rental fees. Moreover, when you have a dispute with your rental car company or hotel, the card issuer will be ready to withhold payment till the dispute is resolved.

But you should think twice before using a debit card to pay rental car companies and hotels. These vendors usually block your account for a certain amount till you return the car or leave the hotel. So, using a debit card here doesn’t make sense since you cannot use the money in your account.

However, when you withdraw funds from an ATM, never use your credit card. That’s because you’ll have to pay cash advance fee and an interest rate will be charged on your account. The cash advance Annual Percentage Rate is higher than when you use the card for purchases. Hence, you’ll lose a good deal of money in this case. Thus, using a debit card is the best option to withdraw money from an ATM.

Now, as far as protections against fraud are concerned, there’s one big difference between a credit and debit card. Till the bank determines whether a scammer has run up charges using your account funds and resolves the situation, you cannot access your money through a debit card. However, if your credit card is stolen, you won’t have to pay more than a few dollars, which some companies may not even charge.

Credit cards may offer protection but you can end up being in debt if you don’t make payments on time. This doesn’t happen with a debit card because you use it to access your own funds. However, you can’t build credit with a debit card, but you can certainly do so if you use your credit card smartly and make payments right on time.