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Credit Card Vs. Credit Card: What is Safer on the Internet?
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Credit Card Vs. Debit Card: Which Is More Secure on the Internet?
When you commit fraud with your credit card the money of the card issuer is at risk. With debit card fraud the money you have paid for is stolen.
By Kevin Cash
Updated Nov 9, 2022 1:13PM PST
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If you frequently use a debit card for online purchases, you may be thinking about reconsidering. If your card information is hacked and purchases are made without your authorization It's easy to discover that credit and debit cards are treated quite differently.
The main difference is that with credit cards, the card issuer must fight to get its money back. With a debit card, you have to fight for your money back.
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How is fraud dealt with
If your credit card information was stolen, and possibly fraudulent transactions have occurred, protect your rights. In the case of credit cards, the primary legislation is known as the Fair Credit Billing Act, or FCBA. When it comes to debit card transactions, the Electronic Funds Transfer Act (EFTA) applies. While these laws offer some similar protections, knowing the distinctions is crucial in understanding why it's better to use one kind of plastic over the other.
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Fraud on debit cards
In accordance with the EFTA, your potential liability for fraudulent transactions with debit cards is almost indefinite. You have until 60 days in which to file a report of a lost or stolen card in accordance with the EFTA. Then, you have to pay back the amount you were taken, even funds siphoned from linked accounts. The liability limits that are specific to the EFTA are:
The card that was stolen or lost is reported prior to transactions that were not authorized: no liability.
Lost or stolen card not reported within 2 days The liability limit is $50.
Card stolen or lost reported within 60 days The liability limit is $500.
After 60 days: no protection.
It's important to know that if your card is not lost physically or stolen, you have 60 days to report fraudulent transactions without liability. If only your card number has been stolen, the 60 days begin on the date on the statement on which a fraudulent transaction is noted.
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Fraud with credit cards
Under the FCBA The maximum liability you can incur for fraudulent transactions on credit cards is $50. If you notify your card lost or stolen before fraud occurs, your liability is zero. A lot of credit cards offer zero liability for all fraudulent transactions.
"I've been the victim of having my credit card information stolen and used fraudulently a number of times," says Tucker Spillane an experienced credit analyst of 24 years old from New York. "Fortunately my card issuer nearly always picks up on the fraud immediately ... usually because the behavior is abnormal from my typical spending practices. And they provide their own insurance against fraud. I've never had to pay a dime."
The real difference between a debit and 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 will not lose any amount. You can report the fraudulent transaction and receive a credit on your statement, and the problem will never impact the balance of your bank account.
When you use a debit card the bank account balance is affected at the time the fraudulent transaction takes place. If the transaction is significant, you could experience the domino effect of financial problems. Fraudulent charges may entrap funds, causing legitimate charges are denied or trigger overdrafts.
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If you don't have a credit or debit card...
Although credit cards are a better bet for spending online but it is possible that you do not possess one. If this is the case, there are still ways to safeguard yourself against fraud.
A low balance in the account linked to the debit card you use to make online purchases can help reduce the amount of fraudulent withdrawals in the event that they happen. While this won't stop anyone in your accounts from accessing it, however, it could reduce the damage caused by a fraudulent withdrawal.
You might also wish to disable any form of (should you have the feature) your account used to purchase. A lot of banks provide this feature (usually on an account that is a checking one) that automatically takes money from a savings account in the event that the checking account is overdrawn. In the event of fraud, this essentially means the crook is able to access two accounts instead of just one. If you do have an overdraft protection in place, be certain to speak with your bank about the best way to use it and when it is applicable.
Another option to reduce your risk is to make use of an pre-paid debit card. If someone does gain 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 standpoint In general, credit cards offer greater protection against fraud. But, there are ways to mimic the protections of the use of a debit card or prepaid card. Deciding which is best for you can help safeguard your cash, whether you're shopping on the internet or in a store.
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