5 signs you should be using a credit card, even if you've been using debit for years

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5 signs you should be using a credit card, even if you've been using debit for years

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  • If you're using a debit card for everything you buy, you could be missing out on valuable perks and rewards. At the very least, you're putting yourself at greater risk when it comes to fraud.
  • If you like to travel, check out travel rewards credit cards that come with benefits like airport lounge access, Global Entry or TSA PreCheck credits, or airline fee credits.
  • Credit cards work best for consumers who are debt-free and able to stay that way. If you are prone to racking up debt, sticking to debit may be a good idea after all.

Using a debit card may be what you're used to, but it's possible that a credit card could be a better deal.

How can you tell? At the end of the day, it really depends on the type of spender you are, how much self-discipline you have, and whether you could benefit from consumer protections and the travel perks some cards offer.

If you're thinking of making the switch from debit to credit, it's important to recognize the signs this could actually be a good idea. Here are five of them.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

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When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

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You're debt-free with plans to stay that way

You're debt-free with plans to stay that way

Credit cards may be convenient to use, but the high interest rates they charge make them a poor option if you need to borrow money for the long-term. Where personal loans often come with rates as low as 5.99% APR for consumers with good credit, the average credit card interest rate is well over 17%. Some of the best travel credit cards even come with rates much higher than that.

Read more: The best balance-transfer credit cards of 2019

Because of the high rates, credit cards are best for people who are debt-free with enough discipline to pay their balances in full each month. If you've struggled with debt in the past or know that credit entices you to overspend, you may want to stick with your debit card.

Read more: How to pay off debt fast, so you can start saving and investing for the future even sooner

You travel all the time

You travel all the time

If you travel all the time and don't have a credit card, you're definitely missing out on important benefits. Top travel credit cards like the Chase Sapphire Reserve and Chase Sapphire Preferred Card come with travel perks like trip cancellation/interruption insurance, baggage delay coverage, primary auto rental coverage, and travel accident insurance. Believe it or not, you get these benefits and more for free as a cardholder.

Read more: Travel insurance makes the Chase Sapphire Reserve my favorite credit card

Some of the best rewards credit cards like the Platinum Card® from American Express, Chase Sapphire Reserve, and Citi Prestige® Card also offer annual travel credits, application fee credits for Global Entry and TSA PreCheck, and free entry into airport lounges across the globe. These perks do require you to pay a credit card's annual fee, but they can pay off in a big way if you travel all the time.

Finally, don't forget about all the points you could be earning for free travel. With the right travel credit card, you could be earning travel rewards good for flights, hotels, car rentals, and more.

Read: The best rewards credit cards

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You are worried about credit card fraud

You are worried about credit card fraud

Another big benefit of credit cards is the fact that they almost all come with 0% fraud liability. This means that, if someone makes a fraudulent purchase with your credit card or card number, you won't be on the hook.

The absolute most you may be liable for under the Fair Credit Billing Act (FCBA) is $50 for credit card fraud, and even that's rare since most cards extend zero liability coverage.

Read more: A security expert says credit cards are still the safest way to pay, but you should "lie like a superhero" when you set up the account

But liability on debit cards doesn't work that way. According to the Federal Trade Commission (FTC), your liability with a debit card is limited to $50 if you report a loss within 2 days of finding out about it but up to $500 if you report the loss within 2 to 60 days of your statement being sent to you.

If you don't report the fraud within 60 days after your statement being sent to you, on the other hand, you could lose "all the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account," notes the FTC.

Read more: How to set up fraud alerts and freeze your credit

You wish you had more consumer protections

You wish you had more consumer protections

Some credit cards offer even more consumer protections in addition to better security from fraud. For example, the Chase Freedom offers purchase protection and extended warranties as cardholder perks.

Some rewards credit cards also offer benefits like guaranteed returns, price protection, free insurance for your cell phone, and more. And remember, these benefits are yours for free provided you use your credit card to make purchases you want protected.

Read more: Why purchase protection on a credit card is so valuable

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You like getting free stuff

You like getting free stuff

The final reason to use credit instead of debit is probably the best one. When you use rewards credit cards for purchases, you can score free stuff.

Some credit cards let you earn cash back that you can use however you want, while others dole out airline miles, hotel points, or flexible travel points. The best flexible credit cards even let you redeem points for several options including cash back, travel rewards, gift cards, merchandise, and more.

Read more: How to get a first-class flight on ANA using credit card points

While various rewards cards offer different amounts of points for each purchase, you'll typically get 1 to 3 points per dollar spent or 1% to 3% back. Some cards with the best rewards programs can charge an annual fee, but there are plenty of rewards cards that don't charge any annual fees.

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