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A debit card user buys a pair of shoes for $89 and gets the pair of shoes. A rewards credit card user buys the same pair of shoes for $89 and gets (1) the pair of shoes, (2) an impact on their credit score rating, (3) strong fraud and identity protection, and (4) travel reward miles or cash back points. In other words, debit card users are losing out on many benefits when making everyday purchases.
If your preferred payment method is using a debit card, now is the time to apply for a CREDIT CARD.
Many people, especially Millennials, seem to prefer to use debit cards. They feel the use of their debit cards gives them better control over their finances and they have less of a chance of running into debt. What debit cards users fail to understand is that the same control and discipline will get them so much more if they were to pay with a credit card.
Using a credit card the way you use your debit card can raise your credit score.
Banks encourage everyone to check their credit score – absolutely free. Why is your FICO® score so important? Lenders, banks, car dealers, merchandisers all rely on an applicant’s credit score when considering whether to finance a purchase. The stronger your credit score, the more likely you are to get a lower interest rate on your car loan, mortgage, and insurance coverage. In fact, the stronger your credit history, the better chance you have of getting a business loan to start a business you always wanted to launch. Having a solid credit score may even land you the job over the other applicants.
Exercising your spend-control behavior while using a credit card allows the credit rating companies to track your credit worthiness. Each month as you pay off the credit card, all while earning those extra rewards (mileage, hotel stays, or even cash back), you are building a solid credit history lenders, employers, and other creditors like to see. The stronger your financial responsibility history, the better loan terms and lower interest rates you’ll receive.
Credit Cards give you more security.
Fraudulent charges are a major concern for all credit card and debit card users. It is important to realize that overall, credit card users have stronger protections to guard themselves from fraudulent activity.
If and when fraud occurs on an account, a credit card user reports it to his/her credit card carrier. Universally, the credit card company gives a credit to your account for the amount of the fraud and there is no effect on your money. Even better, the credit card company takes action to recover the money from the fraudulent activity, not from the cardholder.
When an unauthorized transaction occurs on a debit card, however, the reaction is very different and more damaging. The account holder must first notice and report the fraud within a very limited period, usually about 60 days. If you fail to notice or report the fraud within that time, you lose the chance to get some protection. Secondly, unlike the credit card holder whose money was not lost, the debit cardholder’s money is gone the minute the fraudulent activity occurred. Finally, many debit card companies do not take any significant action to try and recover those lost funds. It becomes the responsibility of the debit cardholder. Having already lost money, the debit cardholder is now going to lose time and money in trying to recover their losses.
Credit Cards give you free travel and cash back.
Credit card issuers continually offer sign-up bonuses that reward you with hundreds of dollars worth of miles, points, free hotel nights, free flights or cash for using a credit card. Although you have a spend requirement in the first three months, this requirement generally is in line with a person’s normal monthly spend for necessities and entertainment. These offers are sent to you pre-approved, which doesn’t mean you’re approved but you have one foot in the door to earning a free seat on your next flight.
People who carry a rewards credit card are well versed in what they can earn and are enjoying their free travel and cash back. Debit card users, on the other hand, are missing out on free perks one earns from a credit card just for being loyal to their brand. A debit card user will purchase the same amount of necessities as a credit card holder but they’re not getting anything back, even when a travel rewards card offers upwards of $625 in free travel.
The Barclaycard CashForward™ World Mastercard® starts with a $200 cash rewards bonus.
Barclays is offering $200 that you can earn by spending $1,000 in the first 3 months of carrying the card. Credit cards offer these sign-up bonuses to get you interested in carrying their cards for your everyday purchases. Most cash back cards offer some type of cash incentive to entice you to be loyal to their brand but also offer encouragement with each and every item that you purchase. The Barclaycard CashForward World Mastercard offers unlimited 1.5% cash rewards on every purchase. Not bad when you compare it to a debit card that earns you nothing. You have your peace of mind that you won’t run into debt. Plus, there’s no annual fee.
If you’re a debit card user this is the simplest of options with the most cash back bonus sign-up incentive. There are cards that offer more up front but come with rotating spending categories that can be annoying to anyone new to rewards credit cards.
This card encourages you to take your earned cash back with a 5% cash rewards redemption bonus to use toward your next redemption. Barclays wants you to cash in on what you earned and give you a pat on the back for doing so. They value you as a customer and want to keep you around.
Carrying this card does not mean you can now go out and purchase things you wouldn’t normally buy with your debit card. Use it the same way you normally spend, and you are now earning something back along with boosting your credit score. A win-win.
- Get a $200 cash rewards bonus after you spend $1,000 in purchases in the first 90 days after account opening
- Earn unlimited 1.5% cash rewards on every purchase
- Every time you redeem, get a 5% cash rewards redemption bonus to use toward your next redemption
- Redeem your cash rewards for a deposit into a U.S. checking or savings account, a statement credit or gift cards. Redemptions start at $50
- Cash rewards do not expire as long as your account is open, active and in good standing
- Enjoy a 0% introductory APR for the first 15 months on purchases. Plus, you’ll get a 0% introductory APR for 15 months on balance transfers made within 45 days of account opening. After that a variable APR will apply, 15.99%, 20.99% or 25.99%, based on your creditworthiness. Please note, there is a fee for balance transfers.
- No annual fee
starts with a 40,000 bonus miles – that’s worth $400 in travel.
The best bonuses come from travel credit cards. The Barclaycard Arrival Plus® World Elite Mastercard® is the easiest to understand as it simply earns 2X miles on every single purchase. This card makes earning miles easy and redeeming is simple compared to most travel rewards credit cards. You don’t have to be loyal to one single airline or hotel. You get an incredible 40,000 bonus mile sign-up with minimum spend of $3,000. This may not the highest sign-up bonus on the market but a great value at $400 with no annual fee the first year. Other cards with larger sign up bonuses lock you into their travel rewards programs, have higher annual fees, and a much greater minimum spend in the first 90 days of carrying the card.
Barclays continues to reward their cardholders for using their cards and redeeming for free travel on any airline or hotel of your choice. When booking your travel you are not left with a zero balance and then starting over. You’ll get an extra value with 5% of your miles back to use for your next redemption. You’re also earning double points on ALL of your spend, unlike other cards that only earn double points on select categories like airlines and restaurants. As far as travel cards go, this one is the easiest to understand and by far one of the best for redeeming your miles.
Another great benefit with this card is you can apply cash back to your credit card statement for when you’ve had an unanticipated large purchase and need help paying it off. This will enable you to avoid tons of interest that you would receive on the balance you could not pay on your credit card statement. You gotta love this card.
- Enjoy 40,000 bonus miles after you spend $3,000 on purchases in the first 90 days – that’s enough to redeem for a $400 travel statement credit toward an eligible travel purchase.
- Earn 2X miles on all purchases
- Get 5% miles back to use toward your next redemption, every time you redeem
- Miles don’t expire as long as your account is open, active and in good standing
- No foreign transaction fees on purchases made while traveling abroad
- 0% introductory APR for 12 months on Balance Transfers made within 45 days of account opening. After that, a variable APR will apply, 16.99%, 20.99% or 23.99%, based on your creditworthiness. There is a fee for balance transfers.
A Credit Card is NOT the gateway to spend what you don’t have.
We know there are daily necessities we must purchase. As we get wiser, we have learned to make sure we have the finances to cover the necessities. Now, without changing our behavior, we can get more for our money.
Your life after getting a rewards card will be much more, well, rewarding. Rather than pull out a “wad of twenties” or our non-rewards debit card to pay at the register, you’ll now swipe your rewards credit card knowing your daily necessities are in hand AND your free airline miles are piling up ready to be used for a dream vacation. Even better, the cash you didn’t use to pay for purchases is sitting in an interest-bearing account until you pay off your credit card balance within the month. And yes, you MUST pay off your balance every month. Otherwise, the debt you always feared could very easily become a reality. Rewards credit cards are only beneficial when you responsibly pay off your balance when the monthly payment is due.
So remember, keep your financial behavior the same when you switch from debit cards to a rewards credit cards. Your everyday purchases could bring you closer to your next family vacation and reduce your travel costs, all thanks to the points you’ve earned. And that helps you save more money for other family expenses, making it an all-around smart financial move for anyone.
Here are some Point Savvy picks for best available sign-up bonuses:
- General Travel Cards: Chase Sapphire Preferred® and Citi® ThankYou® Premier Card
- Airline Cards: Citi®/AAdvantage Platinum Select Card and Southwest Airlines Rapid Rewards® Premier Credit Card
- Hotel Cards: Starwood Preferred Guest® Credit Card from American Express and Marriott Rewards® Premier Credit Card
- Cash Back Cards: Citi® Double Cash Credit Card and Chase Freedom®
How we make our picks
The Point Savvy credit cards team researches hundreds of cards to select the ones that present the best value in each category. We look at annual fees, late fees, intro APRs, go-to APRs, sign-up bonuses, rewards flexibility and rewards redemption value. Oftentimes, cards overlap in categories and are determined to rank among the best in more than one area.