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Credit Card vs. Debit Card: Which Is More Secure on the Internet?
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Credit Card vs. debit card: which Is Safer Online?
In the case of credit card fraud the money of the card issuer is at stake. When you are a victim of fraud with your debit card, your money was stolen.
By Kevin Cash
Updated Nov 9, 2022 1:13PM PST
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If you frequently make use of a debit card to pay to make online purchases, you may consider reconsidering. If your card's information is hacked and purchases are made without your authorization You'll soon discover that credit and debit cards are treated differently.
The main difference is that with credit cards the issuer has to fight to get their money back. When you use a debit card you'll have to fight to get your money back.
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How fraud is handled
If your credit card information was stolen and fraudulent transactions have been made ensure that you are protected. When it comes to credit card transactions, the primary legal framework is called 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, knowing the distinctions is crucial to understanding why it's safer to use one kind of plastic over the other.
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Fraud on debit cards
As per the EFTA, your potential liability for debit card fraud is almost indefinite. You have the option of reporting a lost or stolen card under the EFTA. Once that time has passed, you forfeit the money you took, even funds siphoned from linked accounts. The specific liability limits for the EFTA are:
The card that was stolen or lost is reported prior to unauthorized transactions: no risk of liability.
Lost or stolen card not reported within 2 days: $50 liability limit.
Card stolen or lost filed within 60 days of the incident The liability limit is $500.
After 60 days: no protection.
It is important to remember that if the card you have is not physically lost or stolen, you are entitled to sixty days in which to file a report of fraudulent transactions with zero risk. If only your card number is stolen, the 60 days begin from the date of the statement on which a fraudulent transaction is reported.
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Fraud committed with credit cards
Under the FCBA The maximum liability you can incur for fraudulent credit card transactions is $50. If you report your credit card lost or stolen before fraud occurs, your liability is zero. Many credit cards promise zero liability for all fraudulent transactions.
"I've been the victim of having my credit card details stolen and used fraudulently a number of times," says Tucker Spillane who is a credit analyst aged 24 who hails from New York. "Fortunately my card issuer nearly always picks up on it immediately ... typically because the activity is considered different from my normal spending practices. In addition, they offer fraud protection anyway. I've never been required to pay a cent."
The real difference between a debit card and credit card in relation 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 get a credit added to the statement and the issue is not going to affect you bank account.
If you have a debit card, you bank account balance is affected at the time the fraudulent transaction occurs. If the transactions are significant, you could experience a domino effect of financial headaches. Fraudulent charges may entrap funds so that legitimate charges are denied or result in overdrafts.
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If you don't have a credit card...
While credit cards are a safer option to make purchases online however, there is a chance that you don't have access to one. In this case there are ways to safeguard yourself against fraud.
The ability to keep a low balance on the account that is linked to the debit card you use for online purchases can limit the size of fraudulent withdrawals should they occur. This won't necessarily prevent someone from accessing your account, but it can limit the damage done.
It is also possible to deactivate any type of (should you already have it) your account used for purchase. A lot of banks provide this service (usually on an account that is a checking one), which automatically withdraws from an account for savings when the checking account becomes overdrawn. In the event of fraud it means that the perpetrator is able to access two accounts instead of one. If you do have overdraft protection , make sure to inquire with your bank regarding what and when it's applicable.
Another method to reduce your risk is to make use of an prepaid debit card. If someone gains access to the account, they'll be able to access only to the amount you've loaded on the card.
The bottom line
From a legal point of view, credit cards generally provide greater security against fraudulent activities. However, there are ways to replicate some of these protections with cards that are prepaid or debit. 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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