5 reasons to ditch the debit card

Your debit card may work a lot like a credit card, but there are a few important distinctions that can make a world of difference. We asked some top experts in personal finance why they choose credit over debit -- here are their top five reasons.

Extra consumer protections

It's fairly common knowledge that most credit cards these days give you options to protect against fraud, but that isn't the only consumer advantage to buying on credit.

"Some credit cards also have benefits such as extended warranties, purchase protection and rental car insurance," says Beverly Harzog, financial expert and author of "Confessions of a Credit Junkie." "It's important to read the fine print so you understand the rates and fees, but you also might discover a lot of benefits and perks you didn't know you had."

Growing your credit score

There are a few proven ways to improve your credit score, and buying on credit is one of them. Smart credit use can demonstrate that you're a worthwhile risk and help attract better rates from lenders.

"If you pay your bills as agreed and on time, that's usually the biggest factor in a score, and using less than 30 percent of your credit limit helps you," says Lee Gimpel, co-developer of financial education tool The Good Credit Game. "Conversely, if you don't pay your bill on time . . . you really hurt yourself with respect to your credit score."

So while it's true that you have to spend on credit to pump up your score, it's important to be careful. You'll see higher numbers in no time if you keep your balance below 30 percent of your limit and never miss a payment.

Easier budgeting

Financial planning can mean a lot to keep track of, but credit cards can help shoulder some of that burden. When every transaction you make shows up on your monthly statements, it can be easier to stay on top of where your money goes.

"Using credit cards for everyday purchases can be a great way to keep record of your spending, particularly for budgeting! , cash flow management and tax preparation," says Miranda Reiter, founder of financial planning firm She & Money. "When consumers use one or two credit cards for everyday spending, it takes the guesswork out of where their money is going when it comes time to take inventory of their finances."

Rewards, rewards, rewards

Debit card rewards were fairly common as recently as 2010, but after a few years of shifting regulations you'd be hard-pressed to find one these days. Luckily, though, issuers are still turning out rewards credit cards that can help you get more bang out of just about every buck you spend.

It's important to choose the best credit cards for your personal circumstances, says Harzog.

"If you spend a lot of time in your car, focus on cards that offer excellent gas rebates," she suggests. "If you travel a lot, maybe an airline miles card would work for you. You want to match your lifestyle and expenses to the right card or you won't take advantage of the rewards. If you make a good match, you can actually profit from your cards."

Minimizing risk and playing it smart

There isn't any question that credit cards have their upside as personal finance tools, but it would be unwise not to address the potential dangers.

"Consumers need to be aware of the amount they are charging," says Gail Cunningham, National Foundation for Credit Counseling vice president of membership and public relations. "Ideally, a person would not charge more than they could pay in full when the bill arrives, [or else] the interest and annual fee associated with the card may override the reward benefits."

Ultimately, debit card spending is great training for smart credit use. If you just use your credit card like a debit card -- keeping track of how much you spend and never going beyond the amount you have on hand -- you might be a credit expert yourself in no time.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed ! to help p! eople take control of their financial lives. Its content is produced independently of USA TODAY.

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