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Credit Card vs. Credit Card: What Is More Secure Online?
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Credit Card vs. debit card: which is Safer On the Web?
With credit card fraud the credit card issuer's cash is at stake. With debit card fraud the money you have paid for is stolen.
By Kevin Cash
Updated Nov 9th, 2022 at 1:13PM PST
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If you typically use a debit card for online purchases, you may be thinking about reconsidering. If your card information is stolen and transactions are conducted without your consent, you'll quickly find out that debit and credit cards are treated in a different way.
The difference is the fact that with a credit card the issuer has to fight to get its money back. If you have a debit card, you have to fight for your money back.
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How do you handle fraud
If card information has been stolen and fraudulent transactions were made Protect your rights. In the case of credit cards, the main law is The Fair Credit Billing Act, or FCBA. For debit card transactions it is the Electronic Funds Transfer Act (EFTA) is in effect. Although these laws provide similar protections, understanding the differences is key to understand why it's more secure to use one type of plastic than the other.
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Fraud on debit cards
As per the EFTA guidelines, the liability you could face for debit card fraud is practically infinite. You are allowed up to 60 days to report a stolen or stolen card under the EFTA. After that, you simply lose whatever money was taken, even funds siphoned out of linked accounts. The exact liability limits under the EFTA are:
Lost or stolen card reported prior to transactions that were not authorized: no liability.
Lost or stolen card reported within two days The liability limit is $50.
Lost or stolen card filed within 60 days of the incident The liability limit is $500.
After 60 days: no protection.
It's important to note that if your card is not physically lost or stolen, you're entitled to sixty days in which to file a report of suspicious transactions without risk. If only your card number is stolen, 60 days begin on the date on the statement on which a fraudulent transaction appears.
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Fraud with credit cards
Under the FCBA the maximum liability for fraudulent credit card transactions is $50. If you notify your card lost or stolen before any fraud occurs the liability is zero. Credit cards typically offer no responsibility for any fraudulent transactions.
"I've been the victim of having my credit card information stolen and used fraudulently a numerous times," says Tucker Spillane an experienced credit analyst of 24 years old located in New York. "Fortunately, my issuer almost always picks up on the fraud immediately ... generally because the transaction is different from my normal spending practices. And they provide their own fraud coverage anyway. I've never ever had to pay a penny."
The primary distinction between a debit card and a credit card when it comes to fraud lies in the way you get your money back. When a fraudulent transaction occurs on your credit card, you have lost no cash. You can report the fraud and receive a credit on your statement, and the problem will never be a problem for your bank account.
With a debit card, you bank account balance is affected from the moment the transaction is fraudulent. If the transactions are significant, you could experience a domino effect of financial problems. Fraudulent charges could bind funds to the point that legitimate charges are declined or cause overdrafts.
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If you do not have a credit card...
Although credit cards are the best option to make purchases online, it's possible that you do not possess one. In this situation you can still take steps to safeguard yourself against fraud.
The ability to keep a low balance on the account linked to your debit card that you use for online purchases can help limit the extent of fraudulent withdrawals should they occur. This won't necessarily prevent someone from accessing your account, but it could limit the damage done.
It is also possible to disable any form of (should you have you have it) your account that is used for purchase. Many banks offer this service (usually for an account that is a checking one) that automatically takes money from savings accounts should the checking account be overdrawn. In the case of fraud it is essentially that the crook is able to access two accounts instead of one. If you do have overdraft protection in place, be certain to speak with your bank on what and when it's applicable.
Another way to minimize your risk is to make use of a pre-paid debit card. If someone does gain access to the account, they'll have access only to the amount you've loaded on the card.
The most important thing is the bottom line
From a legal perspective Credit cards typically offer greater protection against fraud. However, there are ways to imitate the protections of the use of a debit card or prepaid card. Deciding which is best for you will help protect your cash, whether you're shopping online or swiping in store.
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