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Truth about credit cards: They're not always evil

Many consumers see credit cards as the devils that tempt them to spend more than they should. Debit cards are the angels in their wallet. But that is not necessarily the case.

Credit cards are not evil. There, I said it. But that’s not how some people see them. They see credit cards as the devils that tempt them to spend more than they should. Debit cards are the angels in their wallet who keep them from piling up mountains of high-interest debt.

I can understand that. Credit counselors say people who can only buy what they can pay for on the spot are more likely to spend less than those who charge it.

But let’s be honest — credit cards don’t make you spend more. And thanks to the , many of the worst tricks and traps commonly used by credit card companies have been outlawed.

“Credit cards can actually be extremely beneficial if you use them correctly,” says Bill Hardekopf, CEO of . “That means paying off your entire balance on time each and every month.”

Credit cards are also the safest way to pay because they have built-in fraud protection required by federal law.

“Normally, you won’t be responsible for any fraudulent purchases on a credit card,” notes Gerri Detweiler, personal finance adviser for . “With a debit card, if you don’t catch the theft right away or you don’t notify your issuer right away, you literally could lose your entire bank account plus an overdraft line of credit.”

Most banks promise zero liability with their debit cards. Even so, you’ll probably have to wait to get your money back. Some banks will return it in a day. Others may take a few days. By law, they generally have up to ten days to investigate your claim.

“That could be a crucial time for you if you need that cash to pay for gas or rent or groceries or the mortgage,” notes Adam Levin of . “If you’re having automatic debits taken out of your checking account, it could cause them to bounce.”

With a credit card purchase, you’re also protected if the merchandise you buy is defective and the retailer or manufacturer won’t help. You can contact your credit card company and ask for the charges to be reversed.

“You can’t do that with a debit card,” says consumer advocate Edgar Dworsky, founder of . “You can’t call up the bank that issued your debit card and say, ‘That refrigerator that I just bought is defective, reverse the charges back to the store.’ No such thing with a debit card.”

Many credit cards also offer a variety of perks, such as:

Extended warranty: Many cards, especially gold and platinum cards, extend the manufacturer’s original U.S. warranty for up to one additional year if you use that card to make the purchase.

Price protection: It’s always nice to know that if you buy something and the price drops, you can get some money back, even if the store won’t help you. Many cards refund the difference (up to a specified amount) if you find the same product from the same manufacturer selling for less within a certain time period. says that’s typically 60 days. There are restrictions and this price protection does not apply to airline tickets.

Baggage fees: Some cards pay for checked bags when you use them to buy your tickets.  With the Continental OnePass Plus MasterCard you can check the first bag on every Continental flight for free. The Gold Delta SkyMiles card from American Express lets you – and up to nine people traveling on your reservation – check the first bag for free on all Delta flights.

Lost luggage protection: Most lost bags usually show up within a few days, but not always. Sometimes your luggage never arrives and the airline or cruise line won’t pay for everything you’ve lost. This secondary coverage from the credit card helps reimburse you for losses not covered by the carrier.

Purchase protection: Let’s say you buy a new TV and within a few months it’s stolen or accidentally damaged. Your warranty won’t cover that. With the “Citi ThankYou Premiere Card” most items are protected against theft, fire or accidental breakage (up to $1,000) for up to 90 days from purchase date. American Express offers similar protection.

Special deals: Some cards give you the chance to buy concert tickets before they go on sale to the general public.

Concierge services: When I travel I always take advantage of the hotel’s concierge service. Many premium cards (such as American Express Platinum, Visa Signature, MasterCard World Elite and Chase Sapphire Preferred) have their own 24/7 concierge service. Use it change your travel plans, find show tickets, make dinner reservations or in any sort of emergency situation.

The list of benefits offered by credit card companies goes on. They include: trip cancellation and interruption coverage, roadside assistance, baggage delay coverage, travel insurance and hotel/motel burglary insurance.

“It’s very important that people check the terms and conditions of the credit card they have or the card they’re considering applying for,” says’s Bill Hardekopf. “Not all credit cards have the same benefits. Those benefits will be spelled out in the terms and conditions, so read them carefully.”

A few debit cards now offer some of the perks listed above. But they still don’t provide the same fraud protection as a credit card.

My two cents
If used wisely, a credit card can be your friend. You get the benefit of the float, the maximum fraud protection and some nice perks (depending on the card). You also build up a credit history. Debit card transactions are not reported to the credit bureaus, so they have no effect on your credit score.

The trick is to use a credit card like a debit card. Never spend more than you have or will have when the statement arrives. You are in control of that card. As long as you don’t use it to buy things you can’t afford, there’s no reason to fear it and many good reasons to use it.

More information
FTC on how to deal with lost or stolen credit, ATM and debit cards