This guest post comes from the editorial team at Card Hub, a website that helps you find the best credit card deals and operates the nation’s largest gift card exchange.
If you’ve ever watched your local news, you know all about identity theft and credit card fraud. You know the dangers of each and how crooks come up with new ways to steal your hard-earned money seemingly on a biweekly basis. You might also think you know the best ways to shield yourself from their tricks because you didn’t change the channel after seeing a teaser about “the newest scam” or “why your credit card might not be safe, even if it’s in your wallet.” However, if you are one of the many people to swap a credit card for a debit card in the name of fraud protection, you my friend, are sadly mistaken.
It’s merely an all-too-common myth that debit cards provide better fraud protection than do credit cards. The truth is debit cards and credit cards have the same safeguards against fraud. Oddly enough, however, this does not mean these two types of spending vehicles make dealing with fraud the same. In fact, fraud is far simpler to handle when a credit card is involved because fraud occurs against your credit line instead of your bank account.
With a credit card, you don’t personally pay for purchases immediately upon making them. Likewise, you don’t have to personally pay for purchases immediately upon anyone else making them either. Instead of money being removed from your bank account at the point of sale, as it is with a debit card, your credit card company essentially fronts money to cover your purchases and gives you at least 21 days from when your monthly statement is ready to pay them back. This means that any potential fraud will disturb your life rather insignificantly.
Imagine for example, a hacker pulls your credit card number off an unsecure website and proceeds to rack up exorbitant charges on your account. Your credit card company notices these suspicious purchases and calls you to verify that it was actually you who made them. Since it wasn’t, the company removes the charges and deals with the fraud themselves, taking you off the hook.
Now, what would have happened if you had been using a debit card instead of a credit card? The money would have been removed from your checking account immediately upon the fraudulent purchases being made, and since you don’t yet know that a debit card’s superior fraud protection is simply a myth, you aren’t in the habit of checking your account balance for irregularities. As a result, you fail to notice your missing funds and mail your rent, utility and children’s college tuition checks as planned. They all bounce. You get slapped with both late fees and returned check charges. And your problems are suddenly escalated.
Debit cards should therefore be avoided as long as you trust yourself not to overspend with a credit card. Not only will a debit card make fraud harder to deal with, but it will also provide significantly fewer rewards as a result of the Durbin Amendment. Ultimately, both time and money are on your side when using a credit card. Time to pay equals time to sort out unauthorized payments. So take your time in deciding between a credit card and a debit card and you’ll save yourself a lot of time and hassle in the unfortunate event that you fall victim to fraud.
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