Many people use both credit and debit cards interchangeably out of habit. The main difference between a debit and a credit card purchase is that a debit card creates a DIRECT link to your bank account and money can be taken out quickly. Generally, a debit card is fine for most things, but the following 4 purchases should be made with a credit card whenever possible:

1. Automatic Bill Payments: Service providers like gyms, cell phone companies, cable providers and utility services offer you the option of setting up automatic deductions on your account. The goal is for you to never forget to make a payment, but billing mistakes can be made by a company’s computer system causing you to pay more. Instead of money coming directly from your bank account with a debit card, you can catch the mistake on your credit card bill and without money ever leaving your account.

2. Hotel Reservations: Most people book hotels well in advance, but they can place holds or deposits on your account for hundreds of dollars as a security deposit. If you use a debit card, this money will be taken out of your account immediately and you run the risk of over drafting if you are not careful.

3. Online Shopping: Every year, thousands of people purchase items online and never receive them. Even though federal regulation generally requires an item to be delivered within 30 days, using a debit card will make a refund more difficult to get. A credit card will allow you to dispute the charge, if it is more than $50, up to 60 days from the purchase date and give you a better chance of getting your money back.

4. Upfront Deposits: Many contracts for home improvement projects or subscription services require down payments followed by regularly scheduled payments. Many times scammers try to take these deposits and disappear so using a credit card will allow you to recoup lost funds.