Now, the question any time you swipe a card is "Credit or Debit". It seems almost inevitable that you will face that question every time you use your card. While the answer you give will depend on the card that you choose to use, this question raises an important follow-up question: "Is one safer than the other?"
(I am defining the question as which card you choose to swipe, not the actual option you select on the pin pad. Some banks want you to choose credit even when you use your debit card, but for the purpose of this tip, they are still debit cards, even if you choose the credit option.)
The actual security of your card number, expiration date, etc. is not going to change regardless of the card you choose to use. The security of your card will be determined by the merchant's security, not the type of card. However, should your card data be stolen, you will be much better off if it is your credit card.
First, a credit card is safer because the bill comes later. While this is a source of problem for many people who spend more than they make, it also makes choosing credit the better option. If there is a fraudulent charge, you can simply choose to ignore the charge, write a letter stating that the charge is fraudulent, and wait for the credit to (hopefully) come on your next statement. With a debit card, your money will disappear from your account, and you will have to show that the charge is fraudulent in order to get it back. My bank has been very good about refunding money involved in debit card disputes within 24 hours, but I have heard stories from others who have had banks that were not so friendly.
If money is taken from your checking account, you could end up not having enough to pay bills, or you could get slammed with overdraft fees when those bills clear. This adds another headache to your already stressful situation.
Second, credit cards are more protected legally than debit cards. Under federal law, your liability in case of fraud is limited to $50 if you notify your bank regarding the fraudulent charge within 60 days. For many years, debit cards lacked this protection. Now, they have the same protection only if you notify your bank within two days. After forty-eight hours, your liability increases to $500. Once again, the liability figures are based on federal law only; it is the policy of many banks to completely clear fraudulent charges for both types of cards when notified within 60 days.
Furthermore, debit cards lack the purchase protection that credit cards have. Under federal law, if your purchase is defective, damaged in shipping, or never shows up, you can dispute the credit card transaction. With a debit card, you are once again relying on the policy of your bank instead of the law to determine if you can file a dispute.
Third, technological advancements have made gaining access to your card number even easier. Skimmers are small devices that can be attached to a credit card machine. They not only give your information to the merchant, but also make a copy that can be sent to thieves. The most common place to find these skimmers is on gas pumps, since they can be installed without a clerk around, but a clerk involved in a fraud ring could easily install one on any device.
If a skimmer picks up your credit card, the thieves will only be able to make charges. However, if a skimmer picks up your debit card--along with your PIN--they can start withdrawing your money from ATMs. Once again, you will have very little legal protection in this case; you will be relying primarily on the protections offered by your bank.
In conclusion, debit cards offer no security advantage over credit cards, as both can be stolen just as easily. However, you will be much better protected legally and your problem will be much easier to solve if you use your credit card. Given these facts, it is no surprise that debit card usage has actually declined. Four years ago, debit cards were used for 40 percent more transactions than cash; today, they are almost equal.
Due to these factors, I have almost completely stopped using my debit card anywhere but an ATM. When I need to pay with a card, I pay with my credit card, and I use an online transfer to move the money from my checking account to my credit card. This keeps me from losing track of my spending and going into debt, but it still offers the protection of a credit card. If you choose to use your debit card, make sure you have your bank's debit card protection policies in writing. (The word of a teller or even the branch manager will not offer you any protection.) Then, keep a close eye on your account for any unscrupulous activity.
Second, credit cards are more protected legally than debit cards. Under federal law, your liability in case of fraud is limited to $50 if you notify your bank regarding the fraudulent charge within 60 days. For many years, debit cards lacked this protection. Now, they have the same protection only if you notify your bank within two days. After forty-eight hours, your liability increases to $500. Once again, the liability figures are based on federal law only; it is the policy of many banks to completely clear fraudulent charges for both types of cards when notified within 60 days.
Furthermore, debit cards lack the purchase protection that credit cards have. Under federal law, if your purchase is defective, damaged in shipping, or never shows up, you can dispute the credit card transaction. With a debit card, you are once again relying on the policy of your bank instead of the law to determine if you can file a dispute.
Third, technological advancements have made gaining access to your card number even easier. Skimmers are small devices that can be attached to a credit card machine. They not only give your information to the merchant, but also make a copy that can be sent to thieves. The most common place to find these skimmers is on gas pumps, since they can be installed without a clerk around, but a clerk involved in a fraud ring could easily install one on any device.
If a skimmer picks up your credit card, the thieves will only be able to make charges. However, if a skimmer picks up your debit card--along with your PIN--they can start withdrawing your money from ATMs. Once again, you will have very little legal protection in this case; you will be relying primarily on the protections offered by your bank.
In conclusion, debit cards offer no security advantage over credit cards, as both can be stolen just as easily. However, you will be much better protected legally and your problem will be much easier to solve if you use your credit card. Given these facts, it is no surprise that debit card usage has actually declined. Four years ago, debit cards were used for 40 percent more transactions than cash; today, they are almost equal.
Due to these factors, I have almost completely stopped using my debit card anywhere but an ATM. When I need to pay with a card, I pay with my credit card, and I use an online transfer to move the money from my checking account to my credit card. This keeps me from losing track of my spending and going into debt, but it still offers the protection of a credit card. If you choose to use your debit card, make sure you have your bank's debit card protection policies in writing. (The word of a teller or even the branch manager will not offer you any protection.) Then, keep a close eye on your account for any unscrupulous activity.
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