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Debit and credit cards offer a convenient way to pay in stores and online. When you're reaching in your wallet, you may not stop to consider the differences between payment cards, but depending on your situation, it may be preferable to use one over the other. To help you make the best decision, here are some of the most common debit and credit card myths debunked.

Myth #1: Debit Cards Are Not as Safe as Credit Cards

Both debit and credit card issuers place a high priority on fraud prevention and have measures in place to avoid unauthorized charges. Federal law states that you may be liable for the first $50 of unauthorized charges when either your credit or debit card is compromised. However, most card issuers don't hold customers liable for any amount of fraudulent spending. Some debit and credit card issuers also offer zero liability protection for lost or stolen cards. Before signing up for a new debit or credit card, it's a good idea to make sure you're comfortable with the issuer's fraud tracking processes as well as your responsibilities as a cardholder.

Myth #2: Debit Cards Can Affect Your Credit Score

Similar to cash payments, debit cards will not affect your credit score when used as intended. The amount of your purchase is subtracted immediately from your checking account balance. Just make sure that there are enough funds so that you don't overdraft the account. Alternatively, credit cards are an extension of credit because you're not paying for monthly purchases until you receive your statement, which could be days or weeks later.

Even if you pay your balance in full, your monthly credit card activity is reported to the credit bureaus, which can affect your credit score. Too much revolving credit can lower your score, but if you're trying to build a credit history, using a credit card consistently and responsibly will help. Further, when your goal is to build credit, paying with debit won't help your credit score. In that case, you may want to make some credit card purchases and pay them off to show that you're able to make payments on time.

Myth #3: You Should Get a Debit Card Before a Credit Card

Because debit cards work differently than credit cards, choosing one payment type over the other has more to do with how you intend to use it rather than considering one as a stepping stone to the other. Debit cards are a substitute for cash and they limit your spending to what's in your checking account. Credit cards, on the other hand, allow you to buy on credit up to an allowable limit and pay later, which gives you the opportunity to build a credit history. If you're interested in building a credit history, it may be better to apply for a credit card with a small credit limit ($500 or less) rather than start with a debit card. If you're trying to stick to a budget and improve your spending habits with the money that is already in your checking account, a debit card might be the better choice.

Myth #4: Your Credit and Debit Card Terms Never Change

Credit and debit card issuers can change certain terms of your agreement, provided they give you the proper notification. For example, if you handle your credit limit responsibly, your credit card company may decide to increase your credit limit. Interest rates on credit cards may also change, especially if they are variable rates that change periodically as the underlying base rate changes. Other terms that may change include rewards programs, so be sure to keep an eye on your statement and note any differences from month to month.

Debit and credit cards are both valuable payment tools, accepted just about anywhere you shop. New innovations like contactless cards are helping to improve your shopping experience and enhance your protection against fraud. When you understand the best ways to use each type of card, you'll easily maximize their benefits, stick to your budget, and build a strong credit history.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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