Using credit cards can strengthen your personal protection. While appearing to be the same, there are significant differences between credit cards and debit cards. A big Caveat…

However, this strategy does come with a big caveat.

* If you have the discipline to pay off your balance each month, then this strategy is for you.

* If you’re prone to over-spending and need to limit temptation, this may not be the best strategy.

Only you can decide… it’s your money.

It comes down to liability and control. About credit cards…

If you lose a credit card, your liability is limited to $50 and you have 60 days to make a written claim to your card company.

With a credit card, you’re using OPM or other people’s money to make purchases. At the end of the billing period, you receive a statement and pay back the lender.

The card company makes money from this service by 1) charging you interest on any outstanding balance, and/or 2) annual and other fees.

When you use your card, you’re increasing the amount of control you have over a specific transaction.

For instance, if you have a dispute with a merchant. You may choose to call your card company and tell them not to pay the merchant and to remove the charge from your account.

In many cases, the card companies will withhold reimbursing the merchant until the matter has been resolved.

At no time was your money at risk until you were satisfied with the outcome. The merchant however, was pressured to resolve it to your (and the credit card company’s) satisfaction so he could get paid. What about debit cards…

With debit cards, the limit of your liability goes from $50 the first two days it’s lost, to $500 up to 60 days from being lost, then your liability is limited by your account balance.

With a debit card, the money is taken out of your account within 1-2 days, and sent directly to the merchant. If you have a dispute, the merchant is less motivated to help you because he already has your money.

He’s in the power position and controlling your money while you try to resolve this issue. You have to be careful not to upset him too much or he’ll just keep your money and write you off as a customer.

Final Note: If you can, use your credit card as much as possible. For those a little nervous about this, when you get home from purchasing something, immediately transfer that amount of money to your credit card company or another account you use exclusively to pay your credit card bills.