It’s true that a credit card can be a great financial tool. When used properly, your credit card helps you build a credit history, and quickly establish a good credit score. However, as with so many things in life, there is a downside to credit cards. Because they are such a big part of your credit history, seemingly small mistakes can add up to make a big impact on your credit score.

Be aware of how your credit score is affected by your credit card habits. Here are 5 credit card mistakes that seem small at first, but if made too frequently — or made together — can add up to overwhelm your credit score, sending it lower:

These credit card mistakes can sink your credit score

1. Paying Late

Your payment history is the most important aspect of your credit score. This means that if you are late in paying, it will be noticed and affect the credit scoring algorithm. Many credit reports list your payment for each credit card every month for the past three years. One or two late payments in that period of time might be overlooked. However, if it appears that a habit is forming, you could find yourself in trouble.

Tip: Always make your credit card payments on time, every time.

2. Maxed Out Credit Card

When you max out your credit card, it looks as though you have money problems. Not only that, but a maxed out credit card can mean that any sort of a fee triggers you going over your limit — and that comes with its own penalties and credit scoring problems. Try to keep your credit card spending to no more than 25% to 30% of your credit limit. With your credit utilization accounting for the second-biggest chunk of your credit score, this is important.

Tip: Only use a portion of your available credit on each card. You can do this by using more than one card, or increasing your credit limit so normal spending doesn’t bring you close to the card limit.

3. Department Store Credit Cards

The type of credit you carry matters. Major issuers are considered “better” credit card debt than others. This means that the more department store credit cards you have, the worse it looks on your credit report. Don’t apply for these cards just for a discount.

Tip: Limit your credit cards to those from major credit card issuers, banks, and credit unions.

4. A Rash of Credit Card Applications

Applying for a credit card will slightly ding your credit score because it is a hard inquiry. One or two applications probably won’t impact your score too much. However, if you apply for several credit cards all at once, all of those dings start to add up. Combine your rash of credit card applications with a growing balance on your other cards, and applications for department store credit cards, and the red flags begin to weigh on what lenders see as your creditworthiness.

Tip: Limit the number of credit cards you apply for.

5. Closing Credit Card Accounts

At first glance, closing a credit card account or two seems like it’s a good thing — not a mistake. However, closing your accounts can impact your score. First of all, it reduces how much credit you have available, which isn’t always a good thing from a creditor standpoint. Second, it reduces the length of your credit history. Your credit history length includes a consideration for your oldest account, as well as the average length of all your accounts. If you close a credit account, you affect your average. If you do end up closing a credit card account, pick a newer card to close.

Tip: Leave your credit card accounts open, but only use them a few times a year to keep the accounts active.

My favorite discount airline is Southwest Airlines. They don’t have hubs everywhere, but they happen to fly in and out of the areas I travel to most frequently, so it works out very well for my situation. Southwest Airlines also usually has the cheapest flights to the locations I fly to most frequently, and they don’t charge for your first checked bag, which is rare these days. The Southwest Airlines Rapid Rewards Program is also a great way to save points which you can redeem for future flights. If you like to fly Southwest Airlines too, then I recommend checking out the Southwest Airlines Rapid Rewards® Plus Credit Card, which is currently offering new account holders a sign up bonus good for a free flight after you make your first purchase. That’s a solid deal!

Free Flight – Southwest Airlines Rapid Rewards® Plus Credit Card

For a limited time, you can sign up for a new card and earn points based on your initial purchases. You can redeem these points for a free round trip airline ticket.  These points are good toward a free flight anywhere Southwest Airlines flies, or they can be redeemed for international travel, hotel stays, gift cards, and more.

Card holders also have the ability to earn unlimited free flights by earning additional points through purchases on Southwest Airlines and by making everyday purchases. Cardholders will also be able to check their bags for free (currently Southwest only allows 1 free checked bag for non- cardholders; cardholders get 2 free checked bags). This is a big savings if you have a large family.

There are no blackout dates and your points and rewards never expire. Best of all, you won’t be charged a fee if you need to change your flight reservations. This gives you the ability to lock in the cheaper early bird rates, then change your flight reservations at a later date if your travel plans change. This can add up to a large savings if you have an irregular travel schedule.

How do the rewards add up? In addition to the initial sign up bonus which can be redeemed for two free flights, cardholders will earn points for everyday purchases. You will receive 2 points per dollar spent on Southwest Airlines flights, 2 points per dollar spent on Southwest Hotel and Car Rental Partner purchases, and 1 point per dollar spent on everything else. Cardholders also receive a 3,000 point bonus on your annual anniversary, which is equivalent to $50 t0ward a Wanna Get Away® Fare.

There are only two downsides that I can find with this card, and neither are a deal breaker for most people. The first, is that there is a $69 annual fee. This is basically covered by the 3,000 bonus points you receive each year, which are good for $50 t0ward a Wanna Get Away® Fare, leaving a difference of $19 for the annual fee. To put that in perspective, most airlines charge more than $19 to check a bag or change a flight reservation (both of which you are free for cardholders). The other downside of the card is that Southwest doesn’t fly everywhere, so this card is best for people who fly Southwest frequently. If you don’t frequently fly on Southwest Airlines, the I recommend you check out these military credit cards for other great options.

Who is this card for? This is a great card for people who frequently travel on Southwest, particularly if they check bags or might need to change their travel arrangements.  Visit the Southwest Airlines Rapid Rewards® Plus Credit Card review for more information.

Here is a recap of the benefits:

• Now! Earn a Free Flight after your first purchase
• Get 3,000 Points every year on your Card member Anniversary – that can be redeemed for a $50 Wanna Get Away® Fare
• Now you can redeem for International Travel, Hotels, Gift Cards and more.
• Earn unlimited Free Flights – 2 Points per $1 Spent on Southwest Purchases and 1 Point per $1 Spent on Everything else
• Your Bags Fly Free! No Blackout Dates, Points Don’t Expire, and Unlimited Reward Seats!
• No Change fees – if you need to change your flight, you won’t be charged a fee.
• September 11th Security Fee Applies.

I am a firm believer that when used properly, credit cards are a good financial tool to have at your disposal. Credit cards offer users a variety of benefits, including consumer protections such as fraud and theft protection, extended warranties, and the ability to dispute charges. In addition to these benefits, many credit cards offer a variety of rewards benefits including cash back, member rewards, and other discounts.

What to expect from a cash back credit card: It wasn’t long ago that most major credit card companies offered credit cards with 3-5% cash back on all purchases. Unfortunately, those cards are no longer around. Most cards offer a similar cash rewards program which starts at or around 1% cash back, with additional cash rewards or bonuses which may be added to sweeten the deal. Some of these additional cash rewards include bonuses for shopping through the credit card company’s online portal where you can get additional discounts from select vendors. Some credit card issuers also offer bonus cash back for making purchases in select categories. Many issuers rotate bonus cash categories on a monthly or quarterly basis. With a little planning the savings can add up!

What to look for in a cash back credit card: Not all credit cards are the same, so it pays to know what to look for. We recommend using a credit card from a major credit card issuer, or a trusted financial institution. Sometimes the best deals come from the major credit card companies; other times the best cards will be from local or regional banks or credit unions. When shopping for a cash rewards credit card, pay attention to the rewards program, interest rate, bonus categories, rewards eligibility, etc. You will also want to determine if the rewards have any expiration date and in most cases avoid any annual fees.

Best Cash Back Credit Cards

We have done some of the leg work for you – these credit cards all meet the criteria listed above. they offer a variety of cash rewards programs and are some of the best credit cards available. We have done our best to find a variety of cards, but it’s impossible to list every card on the market, particularly those from the smaller regional banks and credit unions. Because of this, we have focused on the major credit card issuers and a few of the major military banks. What follows are some of the best cash back credit cards on the market.

Citi® Dividend Platinum Select® Visa® Card. This is a great cash rewards card which features a good cash rewards program and the ability to earn additional cash rewards in rotating categories throughout the year. For example, you can earn 5% cash back from Citi at Home Depot, Home furnishing stores and home and garden stores between 4/1/13 and 6/30/13, with enrollment, in addition to a full 1% cash back on all other purchases and eligible cash advances. New cardholders can earn $100 cash back after $500 in purchases within the first 3 months of account opening. There is no annual fee* with this credit card. Apply for the Citi® Dividend Platinum Select® Visa® Card – $100 Cash Back.

USAA Credit Cards. Becoming a USAA customer is easier than ever before, as USAA now offers banking services to anyone who wishes to apply (they still limit insurance availability to those with a military affiliation and their family members). USAA offers a variety of great credit card options, which offer great cash rewards and other benefits. USAA also offers co-branded affinity cards featuring military affiliations. The image in this article is the USAA Wounded Warrior Credit Card. Each of these cards offer some combination of low interest rates, flexible rewards programs, no annual fees, and USAA’s award winning customer service. Click this link for more information, or to apply for a USAA credit card.

Chase Freedom® Visa – $100 Bonus Cash Back. The Chase Freedom Visa is a winner in our book. New cardholders can earn $100 Bonus Cash Back after making $500 in purchases in your first 3 months of card ownership. On top of the initial $100 cash back bonus you can earn 5% cash back on rotating categories throughout the year (like grocery stores, restaurants and even airlines) and 1% cash back on everything else. Your cash back rewards never expire and there is no annual fee with this card. Read more about the Chase Freedom® Visa – $100 Bonus Cash Back.

Blue Cash Everyday® from American Express. We ranked this card high, but would even consider ranking it higher if American Express card were accepted at more overseas locations.  The Blue Cash Everyday® from American Express offers excellent cash back in different categories including at supermarkets, gas stations and department stores, and on all other purchases. On top of that, there are no annual fees, no minimum spending requirements to earn the highest rewards, and no rotating rewards categories. Learn More About the Blue Cash Everyday® from American Express.

Fidelity Investment Rewards Signature Visa Card. There are two ways to redeem your rewards with this card – you can redeem them for WorldPoints (redeemable as gifts from the WorldPoints rewards catalog), or you can have your rewards deposited into your Fidelity investment account. This card offers 1.5% cash back on your purchases, and spending $15,000 or more per year will increase your cash back rewards to 2%. Apply for the Fidelity Investment Rewards Signature Visa Card.

Navy Federal cashRewards card. The Navy Federal cashRewards card is one of the top credit cards on the market, offering up to 1.5% cash back on all purchases, without spending categories or other qualifiers. There are no caps on the amount of rewards you can earn, your cash rewards never expire, and you can redeem your rewards with as little as $20 cash back. The interest rates are also attractive, as they never exceed 18% APR. There is no annual fee for this card. Here is an in-depth Navy Federal cashRewards card review.

Best Cash Back Debit Card

We know not everyone likes to use or carry a credit card. In that instance, I recommend looking into a debit card with a cash rewards program. Most major financial institutions have done away with rewards debit card programs. We recommend checking out the options at your local bank or credit union, or look into the following card:

PerkStreet Financial^SM Debit MasterCard®. PerkStreet Financial continues to offer best in class debit rewards at a time when most banks are putting their debit rewards programs out to pasture. In fact, their debit rewards program rivals many of these cash back credit card programs. The PerkStreet Financial Debit MasterCard offers cardholders up to 2% cash back on debit card purchases with no maximum cash back limits or annual fees. To get this card you must open a free checking account with The PerkStreet Financial. These accounts are FDIC insured and offer online banking and free bill pay. There is no minimum balance requirement and there are over 37,000 ATMs in their network. Apply for the PerkStreet Financial^SM Debit MasterCard®

Don’t forget to check with your local credit union. There are many military and local credit unions which may offer a great credit card for your needs. We recommend any of the cards above, but as always, do your research and find the best card for your specific situation.

“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”

You would think that dealing with money while traveling abroad would no longer be a big deal in 2011.  After all, in the modern world, there’s no more need for traveler’s checks or cash hidey-holes stitched into your clothing.  Just a quick swipe of a credit card, and you’re ready to go.  Unfortunately, the magic of credit cards does not necessarily mean that your trip abroad will be smooth sailing.  Here are some of the unexpected pitfalls you may encounter when traveling overseas with your credit card—and how to deal with them:

Avoid credit card problems while traveling abroad

1.  Having your card shut down.  If you neglect to mention to your credit card issuer that you will be traveling, that can sometimes flag your foreign purchases as suspicious activity.  If you’ve ever had unauthorized charges on your card, you know that your credit card company will contact you to determine if the suspicious charges are legit or not.  If you’re out of the country, the issuer will not be able to reach you through the normal channels and will assume someone has stolen your card, leaving you with a useless square of plastic in the middle of a charming village on the Mediterranean.

• The Solution:  Call your credit card issuer’s customer service line to give them a head’s up a few weeks before your trip.

2.  High international transaction fees.  Some credit cards make out like bandits on international transactions, where they charge “currency conversion fees.”  These fees are generally a percentage of the dollar amount (meaning the cost in foreign currency is converted by the credit card company).  What makes these fees really insidious is the fact that both the credit card company (think Visa or MasterCard) and the issuing bank charge their own separate fee.

• The Solution:  Find out ahead of time how much you will be charged for your purchases on vacation.  Some credit card companies, including Capital One and certain American Express cards, have no international transaction fees.

3.  American cards might not work at all in Europe.  All American credit and debit cards rely on magnetic stripes in order to process information.  Unfortunately for American travelers in Europe, the old country has almost universally switched over to microchip technology, meaning your cards could be useless.  While MasterCard and Visa require all merchants to accept their magnetic-stripe cards, sometimes cashiers (and unmanned pay kiosks) are unable or unwilling to accept your American plastic.

• The Solution:  Travelex offers a preloaded MasterCard debit card that features the microchip technology accepted all over Europe.  This is a great card to carry with you for the instances when your card isn’t accepted—but don’t let it be your only way to pay.  While there is no fee for using the card, the exchange rate for loading it with foreign currency isn’t great.

4.  Identity theft.  As much of a nightmare this might be while you’re home, it’s that much more difficult to deal with while abroad.  Though European countries do not have a great deal of crime, pickpocketing is rampant.  So it’s important to keep your wallet and credit cards in a difficult-to-reach pocket in crowds and be vigilant when you are using the cards.

• The Solution:  The best way to deal with theft of credit cards abroad is to cancel them as soon as possible.  So make sure you write down your account number and card issuer’s contact information and place it all in a safe spot (like a discreet pocket in your luggage).

A little planning ahead can ensure that using your credit card will be the safest and most convenient way to pay while you’re abroad.

The cashRewards card from Navy Federal is one of their most popular rewards cards, and for good reason. It’s simple and straightforward, offering cash back that racks up with every purchase. And unlike most reward cards, cashRewards honors all transactions, so even if you’re buying a soda down the street, you’re earning up to 1.5% cash back on every purchase.

Too good to be true? Usually; but not this time. Because Navy Federal is a not-for-profit credit union, they don’t have demanding stockholders to appease, so instead, they can stay focused on their members. It’s no wonder that Navy Federal shines in its member-service reviews and lives up to its no-strings-attached reputation. In addition to leaving their members well-served, this card offers several advantages, including some of my favorites:

• Low rates that never exceed 18%
• Cash rewards that never expire
• No caps on the amount you earn
• No annual fee

Not to mention, you can start redeeming for your cash back when you’ve earned as little as $20. I highly recommend this card for its excellent perks. Apply now for the Navy Federal cashRewards card. Click Here.

Military members travel frequently, and credit cards come in handy when you don’t have access to an ATM or if you prefer to make one monthly payment to cover all your purchases over the course of a month – as long as you pay the balance in full, of course! I recommend everyone have access to a credit card, especially those who are living overseas or far from home. You don’t have to use your credit card, but it can come in handy and act as an emergency source of funds which can be used to pay for emergency travel, house repairs, car repairs, or other unexpected expenses. That said, credit cards should not be abused and should only be used if you can afford to pay the balance in full or in the event of a true emergency.

There are many great credit cards out there, so we will try to break them down into different categories to help you choose which credit cards is right for you. Since we only promote responsible credit card use, which includes paying the balance in full, the biggest category will be cash rewards credit cards, which will help put money back in your pocket.

Factors considered in this list: When creating this list we considered several factors, including the overall value of the card, including the company offering the card, cash back credit cards, points or rewards, other perks, annual fees, interest rates, and other factors.

Top Cash Back Credit Cards

Citi® Dividend Platinum Select® Visa® Card. The Citi® Dividend Platinum Select® Visa® Card gives cardholders the ability to earn 5% cash back from Citi at Home Depot, Home furnishing stores and home and garden stores between 4/1/13 and 6/30/13, with enrollment. Cardholders also earn a full 1% cash back on all other purchases and eligible cash advances. There is an excellent 0% Intro APR on Balance Transfers and Purchases for 12 months. After that, the APR will be 12.99%-22.99% variable based on your creditworthiness* The Citi® Dividend Platinum Select® Visa® Card carries no annual fee*. For a limited time, this card offers $100 cash back after $500 in purchases within the first 3 months of account opening. Apply for the Citi® Dividend Platinum Select® Visa® Card.

Blue Cash Everyday® from American Express. The Blue Cash Everyday® from American Express is a solid rewards credit card and would rank higher if American Express were accepted more places overseas. This card offers a generous cash back plan: Get 3% cash back at US standalone supermarkets, 2% cash back at US standalone gas stations and department stores, and 1% cash back on all other purchases. There are caps on the amount of cash rewards you can earn in each category, but there are no rotating rewards categories to worry about, no minimum spending requirements, no enrollment fees, and no annual fees. For a limited time you can also earn a $100 cash bonus when you spend $1,000 within the first 3 months you own the card. Learn more about the for the Blue Cash Everyday® from American Express.

Chase Freedom® Visa – $100 Bonus Cash Back. The Chase Freedom Visa $100 Bonus Cash Back card is one of the best general cash rewards credit cards out there. To start with, you can earn a $100 Bonus Cash Back after you make $500 in purchases in your first 3 months. This card offers 5% cash back on rotating categories throughout the year (like grocery stores, restaurants and even airlines) and 1% cash back on everything else. Your cash back rewards never expire and there is no annual fee with this card. Read more about the Chase Freedom® Visa – $100 Bonus Cash Back.

Fidelity Investment Rewards Signature Visa Card. The Fidelity Investment Rewards Signature Visa Card is a unique rewards credit card. You will receive a cash reward of 1.5% of your purchases, which will be deposited into your Fidelity investment account. You will receive 2% cash back if you spend $15,000 or more per year. If you don’t have a Fidelity account, you can choose to receive your rewards in WorldPoints, which can be used to redeem as gifts from the WorldPoints rewards catalog. Personally, I’m a fan of the cash! Apply for the Fidelity Investment Rewards Signature Visa Card.

Best Credit Cards for Frequent Travelers

The Citi ThankYou® Preferred Card is one of the top rewards credit cards offered by Citi. Right now, new cardholders can earn 15,000 bonus ThankYou Points after $1000 in card purchases within 3 months of account opening – enough for $150 in gift cards or other great rewards! The standard rewards program allows cardholders to earn 1 ThankYou Point for every $1 you spend on all purchases. There is no expiration and no limit on the points you can earn. Cardholders can redeem ThankYou Points for merchandise, travel rewards, gift cards, cash and more. This card features Chip Technology, making it an excellent choice for travel through Europe or other locations that don’t commonly accept credit cards with magnetic stripes. There is a 0% intro APR on Balance Transfers and Purchases for 12 months.  After that, the variable APR will be 12.99%-22.99% based upon your creditworthiness*, and there is no annual fee*.

The Starwood Preferred Guest(R) Credit Card from American Express won the Smarter Travel Editor’s Choice Award for Best Travel Awards Card for Domestic Use. This card gives cardholders an opportunity to earn up to 25,000 Starpoints(R), or enough for up to 6 free nights at a category 1 or 2 hotel. You get 10k points after your first purchase, and can earn 15k bonus points when you spend $5,000 within 6 months, and your Starpoints(R) are redeemable for free nights stay at over 1,000 hotels and resorts in almost 100 countries, or you can receive a free flight on over 350 airlines, all with no blackout dates. There is no annual fee for the first year, then it is $65 per year. Starwood Preferred Guest(R) Credit Card from American Express.

Other Great Military Credit Cards

USAA Credit Cards. You need to be a USAA member to apply for a USAA credit card. Thankfully, becoming a USAA member is easier than ever before, as USAA now offers banking services to anyone who wishes to apply (they still limit insurance availability to those with a military affiliation and their family members). USAA offers 4 credit cards, including the USAA World MasterCard, Active Military MasterCard, USAA American Express, and Military Affiliate Cards. USAA also offers co-branded affinity cards featuring military affiliations. The image in this article is the USAA Wounded Warrior Credit Card. Each of these cards offer some combination of low interest rates, flexible rewards programs, no annual fees, and USAA’s award winning customer service. Click this link for more information, or to apply for a USAA credit card.

Military Star® Rewards MasterCard. The Military Star Rewards MasterCard is offered by Chase and is a huge improvement over the previous version of the Military Star Card, which was only available for use on base. I opened a Military Star Card shortly after I enlisted and used it to help build my credit score. This card has unique offers  for active duty, reserve, guards, retired-service members and their family’s credit needs. Benefits include a competitive interest rate, no annual, late or overage fees, online and Call Center account management, and an exclusive deployment policy in which you will receive 100% refund of your interest and fees during a deployment with Blue Star Benefits*. It also offers a rewards program: 2 points for every eligible $1 spent ON base including the Exchange and AAFES.com, 1 point for every eligible $1 spent OFF base, and up to $600 Cash Back or 60,000 points annually. Apply for the Military Star® Rewards MasterCard.

Best Cash Back Debit Card

PerkStreet Financial^SM Debit MasterCard®. Many banks are in the process of slashing debit card rewards programs, but PerkStreet Financial actually pays rewards that are on par with many of the top rewards credit cards – which is certainly rare! The PerkStreet Financial Debit MasterCard offers cardholders up to 2% cash back on debit card purchases with no annual cash back limits. The PerkStreet Financial checking account is free to open and there are no minimum balance requirements or annual fees. The PerkStreet Financial checking account offers free online banking and bill pay and is FDIC insured up to $250,000. You will have access to over 37,000 ATMs nationwide. Apply for the PerkStreet Financial^SM Debit MasterCard®

Best Credit Cards for People with Bad Credit

If you don’t have a good credit score, then you can still get a credit card to help you improve your credit score by making on time payments and paying your balance in full. The best way to do this is to use a secured credit card, which requires you keep a certain amount of money on deposit with the credit card holder to act as collateral on your charges. The good news is making continual on time payments will help improve your credit score and you can eventually use this to get a traditional credit card. Here are some secured credit cards which may be beneficial to you:

Secured Credit Cards. If you have no credit or bad credit, you can apply for a secured credit card to help you establish or improve your credit score. These cards are virtually always approved upon application. To use them, you are required to keep a security deposit with the card issuer, which acts as collateral for your usage. Many of these cards report to the three major credit bureaus each month, which will help build or improve your credit score as long as you use it responsibly. Because these cards are designed as a tool for people who do not have excellent credit, there is usually an annual fee. Once you get your credit established, it is a good idea to begin looking into credit cards which do not charge an annual fee.

Don’t forget to check with your local credit union. There are many military and local credit unions which may offer a great credit card for your needs. We recommend any of the cards above, but as always, do your research and find the best card for your specific situation.

“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”

As more people are cutting back on their spending and are paying more attention to managing their financial affairs, many have made the decision to cut out credit cards from their life and rely solely on cash or debit cards. It can be a good plan if you can’t trust yourself with credit cards but there are differences between credit and debit cards that may affect you more than you think.

What’s the Difference Between Credit Cards and Debit Cards?

When you are making purchases on a credit card, you are essentially using money you borrowed from the financial institution that issued the card. The bank pays the debt and you are obligated to pay the money the money back with interest each month. Credit cards are generally accepted in all retail locations, restaurants, gas stations, ecommerce sites, and for bill payments. They can be used to reserve hotel rooms, rental cars, or airline tickets.

When you make a purchase using a debit card, you need to already have the cash necessary in your bank account. Debit cards will subtract the money used for the purchase directly from your bank account. Unlike credit cards, debit cards are not always accepted from retail merchants and other businesses. Those that do accept them, such as car rental agencies, may also require significant deposits or proof of income before a debit card can be used for reservations.

Are Credit Cards Better than Debit Cards?

There is no easy answer to this question because there are pros and cons to each method of money management. There are several factors to consider and depending on your own financial situation, you may find that one works better for you than the other or you may use both equally as often.

Here are some considerations:

Creditworthiness

In order to get a credit card, you typically need a good credit score because must undergo an application process and a credit check. People with low credit scores may not qualify for a line of credit from a financial institution, though they may be able to apply for a secured credit card, which requires a deposit. With debit cards, typically any consumer with a bank account can link a debit card to their funds with being approved based on credit histories.

Consumer protection for credit and debit cards

Credit card companies have liability laws that obligate the consumer to be liable for $50 in the event of fraud. You have 60 days to report fraudulent charges or activity for the credit card company to investigate. Credit card companies also offer assistance with purchase issues and can act fast should your card be stolen.

Banks limit liability of consumer to just two days in the event of credit card fraud. Any information reported after that time increases the liability to $500. Chances are good that many consumers will not notice something amiss in just two days. There are generally no additional warranty assistance on purchases made using a debit card. If the card is stolen or lost, the entire account is at risk until the loss can be reported and investigated. Bank accounts are generally frozen until the investigation has been completed so consumers have limited access to their money.

Emergency Relief

Credit cards are good in the event of an emergency. The line of credit allows for purchases to be made within the credit limits. Using a debit cards means you need to have the cash on hand to help when something happens.

Impulse Buys

If you are spending on credit, you may inclined to spend more recklessly than if you had cash in hand. Credit card use can be tempting when you are not budgeting your cash properly and can lead to overspending and an inability to pay the bill. With a debit card, you can not spend more than you have, which helps prevent impulse spending.

Tips for Choosing Between Credit Cards and Debit Cards

Again, there are pros and cons to both. My recommendation is to examine your financial habits and make the decision that best meets your needs. And if you decide to use either one of them, then I highly recommend reading the fine print. You want to sign up for a credit card or debit card that doesn’t have any monthly or annual fees and if you can, it is best to use a credit card or debit card with rewards programs so you can take advantage of cash back offers, rewards points, or other benefits. Here are some options:

• Best Rewards Credit Cards.
• PerkStreet Financial – Bank Debit Reward Card.

USAA Bank and The Wounded Warrior Project (WWP) recently announced a co-branded credit card, the USAA Wounded Warrior Project World MasterCard®, to raise awareness and funds for severely injured service men and women. The Wounded Warrior Project provides support and programs to service members with traumatic war injuries.

Wounded Warrior Credit Card

The co-branded USAA Wounded Warrior Project World MasterCard® will be available to USAA members who wish to help support the WWP. You can find a link to all of USAA’s military related credit cards here.

USAA also announced the offer of a free consultation with a USAA Certified Financial PlannerTM for recipients of the Traumatic Servicemember’s Group Life Insurance benefit. This is a great way to help our wounded vets better prepare for their future.

Traumatic Servicemember’s Group Life Insurance benefit (TSGLI) is a military program funded by the government that provides a lump-sum payment of $25,000 to $100,000 for certain combat-related injuries. WWP played a pivotal role in lobbying for this benefit, which is designed to assist service members with combat related injuries, and their families, with the financial burdens associated with recovering from a severe injury.

How it works

The USAA Wounded Warrior Project World MasterCard® works just like a cash back credit card, except that USAA will send a percentage of the purchase amount to the WWP to fund their programs. Essentially, the cash back goes to support WWP in developing and delivering unique programs and services to meet wounded warrior needs.

About the Wounded Warrior Project. The Wounded Warrior Project’s mission is to honor and empower wounded warriors. Its purpose is to raise awareness and to enlist the public’s aid for the needs of severely injured service members, to help severely injured men and women aid and assist each other, and to provide unique, direct programs and services to meet their needs. To learn more, visit www.woundedwarriorproject.org.

About USAA. USAA provides insurance, banking, investment and retirement products and services to 7.4 million members of the U.S. military and their families. Known for its legendary commitment to its members, USAA is consistently recognized for outstanding service, employee well-being and financial strength. USAA membership is open to all who are serving or have honorably served our nation in the U.S. military – and their families. For more information about USAA, or to learn more about membership, visit usaa.com.