Why you should be using a credit card instead of a debit card

Squashed in alongside month-old receipts and business cards whose owners you no longer remember, there’s a pretty good chance you have at least one debit card and one credit card in your wallet.

While these cards are similar in function and damn near identical in appearance, most Kiwis are more inclined to use their debit card. In fact, in 2015 the average New Zealander made 234 debit card transactions and just 86 credit card transactions, according to figures collated by PaymentsNZ.

Here at PocketWise, we reckon these numbers should be a lot closer. Here’s why you should be reaching for your credit card instead of your debit card:

1. Get free stuff

When using a debit card, the money required for a given transaction is taken from your bank account with no return to you, the user. The money’s gone, end of story.

In contrast, many credit cards feature reward systems that essentially gives you free stuff (typically Airpoints, luxury goods or cash) for making transactions on the card. These rewards can stack up surprisingly fast and provide you with some compensation for all your hard shopping.

Use our handy NZ credit card comparison tool to find the card (and rewards!) best for you.

2. Improve your credit scores

You might not realise it, but behind the scenes certain organisations are tracking your credit history (essentially how reliable you are as a borrower). Financial institutions use this information to decide whether or not to issue you a loan, grant you a mortgage and increase your credit limit.

Using your credit card and paying it off on time is an effective way to build your credit score and prove to banks that you’re a trustworthy borrower. You cannot do this with a debit card.

3. Make sweet, sweet chargebacks

We’ve all been disappointed in the quality of a product or service we’ve purchased.

In this scenario, with a debit card, you’re more or less at the mercy of the merchant. With a credit card, on the other hand, you can dispute the transaction and, more often than not, reverse the transaction and get your money back.

Happy comparing, and saving.

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