If you're like many Americans, you might find you're saying "debit" instead of "credit" more often at the cash register. Debit card use rose dramatically in the last decade, surpassing credit card use in 2006, according to Federal Reserve estimates.
But consumer protections differ for the two payment options, making credit cards the better choice in some circumstances. Here are four instances when you should use your credit card instead of your debit card:
1. Hotel Registration
When you check in, the hotel puts a temporary hold on your account for more than you might spend, say $250 a day, to protect itself against losses. Once you check out, the hotel removes the hold and charges you the correct amount. If you use your credit card, the hold is put against your credit limit. But if you use your debit card, the hold freezes that cash in your checking account. Better to have a portion of your credit limit frozen for a few days than your cash flow restricted.
2. Online Shopping
Under federal law, you're liable for no more than $50 per credit card in case of fraud, and many credit card companies have zero-liability policies. But with debit cards, your liability is limited to $50 only if you report the problem within two business days. After that, you could be liable for hundreds. Take advantage of the stronger credit card fraud protections and use your credit card to shop online.