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Credit Card vs. Debit Card: Which Is More Secure On the Web?
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Credit Card vs. Debit Card: Which Is More Secure On the Web?
With credit card fraud, the card issuer's money is at risk. When you are a victim of fraud with your debit card your cash is taken.
By Kevin Cash
Updated Nov 9, 2022 1:13PM PST
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If you usually make use of a debit card to pay to make online purchases, you may consider reconsidering. If your credit card details are compromised and transactions are made without your consent You'll soon discover that credit and debit cards are treated in a different way.
The main difference is that with a credit card the issuer of the card must fight to get its money back. When you use a debit card you must fight to get your money back.
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How is fraud dealt with
If your card details have been stolen, and possibly fraudulent transactions were made ensure that you are protected. In the case of credit cards, the primary legislation is known as the Fair Credit Billing Act, or FCBA. For debit card transactions it is the Electronic Funds Transfer Act (EFTA) applies. While these laws provide similar protections, understanding the differences is key to understand why it's more secure to use one type of credit card over another.
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Fraud on debit cards
In accordance with the EFTA the potential liability for debit card fraud is almost indefinite. You are allowed up to 60 days to report a lost or stolen card in accordance with the EFTA. Once that time has passed, you have to pay back the amount you were taken and even the funds taken from linked accounts. The exact liability limits under the EFTA are:
Lost or stolen card reported prior to transactions that were not authorized: no responsibility.
Lost or stolen card not reported within 2 days Limit of liability $50.
Lost or stolen card reported within 60 days: $500 liability limit.
After 60 days: no protection.
(image: http://www.imageafter.com/image.php?image=b8architecture_exteriors102.jpg&dl=1)It's important to know that if your card is not physically lost or stolen, you're entitled to the right to make a claim within 60 days of any fraudulent transactions, with no responsibility. If only your card number has been stolen, the 60 days start from the date on your statement on which a fraudulent transaction is noted.
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Fraud with credit cards
Under the FCBA the maximum liability for fraudulent credit card transactions is $50. If you report your credit card lost or stolen before any fraudulent transactions occur the liability is zero. Credit cards typically offer no responsibility for any fraudulent transactions.
"I've experienced having my credit card details stolen and used for fraud a several instances," says Tucker Spillane, a 24-year-old credit analyst who hails from New York. "Fortunately my credit card issuer almost always detects the fraud immediately ... typically because the behavior is abnormal from my typical spending practices. And they provide their own fraud protection anyway. I've never ever had to pay a penny."
The primary difference between a debit card and a credit card when it comes to fraud is in how you can get your money back. When a fraudulent transaction occurs on your credit card, there is no loss of cash. You can report the fraudulent transaction and get a credit added to your statement, and it won't affect you bank account.
If you have a debit card, the bank account balance is affected at the time the fraudulent transaction occurs. If the transactions are substantial and significant, you may experience an effect that is a result of financial stress. Fraudulent charges may entrap funds, causing legitimate charges are denied or trigger overdrafts.
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If you don't have a credit card...
Although credit cards are a safer bet for spending online but it is possible that you do not have access to one. If this is the case you can still take steps to protect yourself from fraud.
A low balance in the account linked to the debit card you use for online purchases can help limit the size of fraudulent withdrawals when they occur. While this won't stop anyone to access your bank account but could limit the damage done.
You may also want to deactivate any type of (should you have it) on the account you use for purchase. There are many banks that offer this option (usually on an account that is a checking one) which will automatically take money from an account for savings when the checking account becomes overdrawn. If a fraud occurs it means that the crook has access to two accounts instead of just one. If you do have an overdraft protection in place, be sure to inquire with your bank regarding what and when it's applicable.
Another method to limit your liability is to use the credit card that is prepaid. If someone gains access to the account, they'll gain access to only what you have loaded onto the card.
The most important thing is the bottom line
From a legal perspective Credit cards typically offer greater security against fraudulent activities. However, there are ways to replicate certain of these security features using the use of a debit card or prepaid card. Choosing the right one for you can protect your funds whether you're buying on the internet or in a store.
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