Here are 3 reasons why paying with a credit card is safer than a debit card or cash

Everyone has their preferred way of paying for things. Some like using cash and coins, while others choose newer payment methods like Apple Pay. But other than earning heaps of travel rewards in the form of airline miles or hotel points, there are several other benefits of paying with a credit card.

Debit cards and cash offer consumers limited benefits, while using a credit card can help protect you against purchases that go awry. A credit card is guarded from fraudulent activity and some offer benefits like travel insurance and return protection.

Here's what you need to know about the benefits of paying with a credit card over a debit card or cash.

When you spend on a debit card, the funds are taken directly from your checking account. Now what if your debit card, or even simply the information of your debit card, falls into the wrong hands? This leaves your checking account, your lifeline to pay bills or withdraw cash from an ATM, vulnerable.

And depending on the timeline of when you report it, you could be held liable for some of the damages. According to the Federal Trade Commission (FTC), if you report your debit card lost or stolen before any malicious charges are made, you won't be charged anything. If it's within two business days that you report the loss, you can be held responsible up to $50. If it's more than two business days but less than 60, your loss can be up to $500. If it's beyond 60 business days, you could be held liable for all charges.

However, if someone makes unauthorized transactions with your debit card number, but you did not lose your card, you are not liable for any charges if you report them within 60 days of your statement being sent to you.

The trouble with this happening is that if a fraudster drains your checking account, this could send ripple effects throughout your personal finances, possibly leading to late bill payments for things such as a mortgage or personal loan. Late and missed payments can have a negative impact on your credit score.

With a credit card, fraudulent charges are much less of a concern, as it is not your money — but rather your credit. And nearly all credit cards come with zero liability protection.

You've likely experienced buyers remorse at one point or another. It can be for a number of different reasons, from being displeased with the quality of the product, to the vendor not delivering on what it promised. When you purchase with cash or a debit card, your protections mostly rely on the retailer's return policy. With a credit card you won't be at the whim of the vendor, there are other avenues you can take to rectify your purchase.

If you've used a credit card to buy something, you can call your credit card issuer to dispute the charge. Sometimes called a chargeback, this is where you contact your bank to notify them that a purchase was never received or arrived damaged.

This will typically mean filling out a short form, describing what you purchased, and why you aren't satisfied with the purchase. This can also be done if you never received an item. The card issuer will then reach out to the vendor to follow up, and make a decision if you should be refunded.

In addition to disputing purchases, credit cards come with a long list of consumer protections. However, not all credit cards offer all of these, so it is important to find the best credit card for you by looking into all of their benefits.

Here are a few consumer protections credit cards provide:

Return protection

Some merchants do not have flexible return policies. If you make a purchase, attempt to return the product for a refund, and are refused, this would activate the return protection policy.

Several American Express cards, including The Platinum Card® from American Express, offer this policy, and it covers each incident up to $300 per item and up to $1,000 per year in claims.

Travel insurance protection

Travel insurance has become an increasingly popular benefit for consumers after Covid-19 induced massive travel restrictions and cancellations. By having a credit card like the Chase Sapphire Preferred® Card your trip is protected as long as you pay for your travel expenses with the card. The policy comes with several coverages, such as trip cancellation and interruption insurance, baggage delay insurance and trip delay reimbursement.

Cell phone protection

By simply paying for your cell phone bill with the right credit card, your cell phone can be covered up to a specified amount for damage, loss or theft. There is likely a deductible if you file a claim, and documentation may be needed by the insurance company. For example, the Chase Freedom Flex℠ offers cardholders up to $800 per claim and $1,000 per year, with a reasonable $50 deductible.

Credit cards are a resource which provide consumers certain protections over other forms of payment. However, they must be used responsibly, and it is best to pay them off in full each month in order to avoid costly interest payments. If you can spend responsibly the extra protections offered by credit cards, rather than paying with a debit card or cash, makes using them a worthwhile investment.

For rates and fees for The Platinum Card® from American Express, click here