4 reasons to use your credit card before the debit card

Choosing a debit card is a good way to avoid the debt of using a credit card. However, between building your credit history, protecting your checking account, and earning interest, there are several reasons why it's better to choose credit over debit.

According to the Financial Inclusion Report in Chile in 2019 presented by the Superintendence of Banks and Financial Institutions, regarding the percentage of the adult population with banking products by gender, 24.9% of men and 27.2% of women have at least one bank credit card. So there are already a large number of people who can choose to have more benefits.

If you spend within your means and pay the balance in full every month, you don't have to pay interest and debt. These are the actions that allow you to use the credit card without problems. In addition, you can take advantage of several benefits, including the possibility of improving your credit profile and the opportunity to obtain valuable rewards.

If you decide to use your credit card to get the most benefits, you have to use it as if it were a debit card. This means not spending more money than you have and not leaving a balance each month by paying the minimum amount or only a part of your balance. You have to pay the balance in full each month to avoid extra fees and rack up debt.

You may also be interested in reading: Credit card billing: how does it work? to know better how to manage the expenses you make.

Use your credit card to protect your bank account

Credit cards offer stronger protection against fraud and offer a degree of separation from your bank account, which serves as an added security measure.

Debit cards are directly connected to your account. Every time you make a purchase, whether it's processed as a credit or debit, the funds are immediately withdrawn from your account and transferred to the merchant. It's like an electronic check.

If a thief takes your card and makes a withdrawal, you will lose any cash the person spends or can get from the ATM. While most banks and card processors offer at least basic fraud protection, you may not get your money back right away, especially if a lengthy investigation is required.

With a credit card, however, the money in your bank account isn't posted until you pay your statement. If someone steals your number and makes fraudulent charges, you can mark it as fraud and that way you won't have to pay it (the card will be frozen) while the situation is investigated. You don't have to worry about losing money.

Find out more about card cloning and internet scams so you know what measures you can consider to take care of your account and cards.

To get rewards

Many credit cards offer travel rewards or cash back for every dollar you spend. Some offer more rewards for certain purchases, like dining out, buying groceries, gas, or spending on travel, allowing you to rack up more on your regular spending.

While some cards charge annual fees, often the rewards and benefits can exceed those fees. If you pay your balance in full each month and don't earn interest, you earn cash or points just for your routine expenses.

To improve your credit profile

Almost all people have a credit profile saved by the country's financial institutions. This profile contains information about each loan requested, retained or paid and is taken into account when granting new loans.

Your credit profile is positively affected by transactions that show responsible use of credit: such as a history of on-time payments, having multiple accounts, not having large debts, and access to credit over a long period of time. On the other hand, the profile is negatively affected by not making payments, making them out of date or not having a good credit history.

When you use and pay off a credit card every month, it improves your credit profile. So when it comes time to apply for a major loan, such as a car or a mortgage, you're more likely to be approved at a lower interest rate if you have a positive credit history. Using a debit card does not affect your credit history at all.

Many credit cards offer certain purchase and travel protections. Some of these benefits may be coverage such as travel delay insurance, which covers the costs of hotels, clothing, food, and toiletries if your flight is delayed overnight.

Another offer is purchase protections. If something you buy is damaged, lost, stolen or unusable within a certain period of time after you bought it, you may have claim coverage, as long as you chose the credit card to buy it. They may also include extended warranty protection, which offers an additional year of coverage on select purchases that come with a manufacturer's warranty of three years or less.