7 everyday card questions that can leave you confused
Keep the receipt? Store card details online? What you need to know
Consumer finance expert, author and “Opening Credits” columnist.
Like most card-carrying consumers, you need to make decisions about your plastic usage on a regular basis. If you’re not prepared, you may be caught off guard, not knowing exactly what to do. Then, when you land on a choice, you’re not entirely sure it was the correct one.
Get it right the first time. Here are some of the most common yet strangely vexing questions regarding credit and debit cards, and how you can answer them with confidence.
1. Should you save your credit card account information on a retailer’s website?
The answer is yes if you shop at the online retailer often and it’s a secure site, says Robert Siciliano, a security analyst with Hotspot Shield, an internet connection security company.
For websites set up and managed by established companies that go the extra mile to protect your data (such as Amazon, which employs multiple layers of security), your saved account information is generally safe. The convenience of having your card on file often outweighs the risk the site will be hacked by cybercriminals.
But consider what could be more of a threat: your own temptation to shop. If you have a hard time controlling yourself, choose not to save your card on the site. Having it at the ready makes it too easy for you to push the “buy” button, so you’ll end up overspending and getting into financial trouble. Manually entering the numbers can give you enough buffer time to reconsider the purchase.
2. Should you pay with your credit or debit card?
Pull out your credit card if you know you will have the money to delete the entire balance when the bill comes due, say Sean Fox, co-president of Freedom Debt Relief. Turn to your debit card when you can’t.
This basic rule of thumb will keep you out of unwanted debt. When online shopping, though, you should defer to a credit card. “If you need to dispute a transaction, you can report it to the card issuer,” says Fox. “You are not liable for the charge until the dispute is resolved.”
Credit cards are also better for covering most travel expenses. If you use a debit card for hotel accommodations or a rental car, funds in your checking account may be blocked to cover the cost of your entire stay or rental, plus projected incidentals. That might tie up spending cash during your vacation.
Also, if you have an airline card that offers free baggage, extra insurance protection and other perks, that’s the one you’ll want to whip out when buying tickets on that carrier.
3. Do you want to open a store card for a discount on that day’s purchases?
Answer no, unless all the following is true:
You entered the
store with the intention of getting the card because you shop there often.
Applying for credit cards should never be a random, impetuous decision.
- The money you
save that day is truly compelling. Shaving off $5 won’t help you much, but $100
or more might.
- You qualify. If
your credit rating is terrible and you don’t have an income, you’ll not only be
rejected, the hard inquiry can hurt your credit score.
- You don’t plan on carrying a balance. CreditCards.com’s 2017 Retail Store Card Survey found that the average retail card APR is 24.99 percent, a much higher rate than the overall average APR of 16.41 percent. Acquiring an unmanageable balance on a retail card can be dauntingly expensive.
As an alternative to opening an account at your favorite store, Fox suggests asking the cashier if they offer an app or email list that will include coupons and alert you to upcoming sales.
4. Can you use travel rewards points for purchases?
Don’t use travel rewards for purchases until you assess the value of those points first, says Brayden McCarthy, a credit card expert and vice president of the small-business lender Fundera.
“You’ve got to keep an eye on where the redemption value for your points is highest, and then only use your points where your bang for buck is greatest,” says McCarthy.
You can locate that the value of your points on the credit issuer’s website as well as in the fine print of the agreement. If it’s still confusing, call and ask a representative to break down the conversion for you.
“It might be .5, 1 or 1.5 cents per point depending on whether you’re trading them in for flights, gift cards, cash or goods,” says McCarthy.
Cardholders usually get the most value for their points when redeeming rewards for travel. Start by checking your card issuer’s travel portal. Also, check the value of your card’s points.
“For example, if you’ve got a Chase Sapphire Preferred or Reserve card, your points will be worth 25 to 50 percent more if you book your hotel or flights through the Chase Ultimate Rewards portal,” McCarthy says. “That will make your points worth about 1.5 cents per point.”
5. Should you ring up a debit card purchase as a credit or debit?
Select debit if you care about the merchant’s bottom line, as you might for the owner of a small neighborhood store. That’s because the interchange fees on debit transactions are lower than they are for credit, so you’ll be helping the shop owner.
Outside of that issue, there is only a minor difference for you. With the charge option, there might be a slight delay in the money coming out of your checking account as the transaction passes through the card’s processing system, which can take a few days. If you run the sale as a debit, you’ll insert your PIN, and the amount you spent will be deducted in real time.
In either case, you’ll have to ensure that the money is in your account and ready to be deducted.
6. Do you want a copy of your receipt?
Say “yes, please” if there is a possibility you may want to return the item, and the retailer does not offer an emailed receipt.
While you will have a record of the transaction on your credit card or checking account statements, stores usually prefer the actual receipt. Handing over a receipt will save you time and aggravation when requesting a refund or an exchange.
Receipts also can be handy for tracking spending for budget management, and if you itemize deductions on your tax return they’re good to have.
However, if you’re hesitant to give the receipt back to the cashier or to toss the receipt in the trash because you’re worried about identity theft, relax. There now is nothing on sales receipts that a crook can use to commit fraud.
The credit or debit card information you used to make the purchase is now truncated to just a few digits. It’s not enough for someone to fraudulently use your account.
7. What's the best use for my cash-back rewards?
Take the money and run whenever you feel like it. There is no benefit to letting the cash build. The value is usually a penny a point, and when you’ve got the equivalent of about $25 (some credit card issuers set cash-out minimums), you’re free to use what you’ve accumulated.
In fact, it may behoove you to redeem your cash back regularly because, depending on the issuer’s policy, these rewards might expire.
If you carry a balance, your very best redemption option is to use your cash back as a statement credit. If you do not have the option of a statement credit, have the money sent to you as a check or deposited directly into your checking account. Use the money to boost or start a savings account (especially important if you have little set aside for emergencies).
You also can see if you can redeem your cash rewards for gift cards on the issuer’s shopping portal.
Having thought out your answers to the seven questions above, you now can go about your credit and debit card business fully prepared to make the correct decision with minimal hesitation.
Best of all: You won’t have that nagging feeling of “did I do this right?” weighing you down.
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