Most of you know that I don't care for debit cards. (If you didn't know that, you can read why here.) For a summary, debit cards have much fewer legal protections (although my bank's policy extends all of its credit card protections to debit cards) and for fraudulent charges, you are stuck fighting to get your money back instead of just fighting to get the charge off of your bill. I have cut out almost all of my debit card use; I make a few small purchases each month in order to keep my account from getting a service charge, and use cash or my credit card for everything else. However, there are a few places I never use my debit card, simply because there is an increased risk of fraud:
1) Gas Pumps - Card skimmers have become cheaper to make and easier to install. However, the biggest problem is finding a place to install them. Gas pumps make an excellent target because they are relatively free from employee surveillance and no one will question why you're standing around near a gas pump. In under a minute, someone can attach a card skimmer to the gas pump and drive by every few days to download the data it collected via wireless. Your transaction will go through just like normal, but your card will be copied and sent to an additional destination.
2) Restaurants - Restaurants are one of the few places where we accept that our card will leave our sight for an extended period of time. Unfortunately, restaurants have not been able to come up with a practical solution for this problem. If you wouldn't walk up to a stranger and hand him or her your debit card, why would you give it to someone you don't know at a restaurant? Yes, the vast majority of waiters and waitresses will not try to steal your information, but you have no way of picking out the one or two people in your city who are working there for other reasons.
3) The Gym (And Other Places with Automatic Payments) - It might sound like a great idea to have your automatic payments deducted from your checking accounts. But will you remember to deduct it from your records each month? If you forget, you will be facing overdraft charges. Plus, hearing stories of people who were charged for a recurring payment after the payment was cancelled should be enough to make you want those charges to go on your bill instead of coming out of your checking account.
4) Online - It seems that hackers are getting into everything these days. In fact, I sometimes wonder if it is even safe to buy anything online these days. However, if you are going to make a purchase online, it will be much safer to keep the number that accesses your checking account off the internet.
While it is true that your credit card is just as vulnerable as your debit card at these locations, your credit card will be much better protected and you won't be without your money until your bank completes its investigation. Cash is obviously best, but it is inconvenient at the gas pump and impossible to use online, so when you must swipe a card, credit is your safest alternative.
As a final note, I have had a couple people tell me they are concerned about overspending on their credit card and not being able to pay the bill when it comes due. Fortunately, there is an easy solution: transfer the money from your checking account onto your card as soon as you make a charge. This way, you get the safety of a credit card while preventing a large bill at the end of the month.
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