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Credit Card Vs. Credit Card: What is Safer Online?
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Credit Card Vs. Debit Card: Which Is More Secure Online?
In the case of credit card fraud the credit card issuer's cash is at risk. When you are a victim of fraud with your debit card your cash is stolen.
By Kevin Cash
Updated Nov 9th, 2022 at 1:13PM PST
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If you typically make use of a debit card to pay to make online purchases, you may be thinking about reconsidering. If your card information is compromised and transactions 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 its money back. With a debit card, you must fight to get your money back.
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How fraud is handled
If your card details have been stolen and potentially fraudulent transactions were made, protect your rights. For credit cards, the primary legal framework is called the Fair Credit Billing Act, or FCBA. When it comes to debit card transactions, there is an additional law called the Electronic Funds Transfer Act (EFTA) applies. While these laws offer some similar protections, knowing the difference is essential to understanding why it's safer to use one kind of credit card over another.
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Fraud on debit cards
As per the EFTA the potential liability for fraudulent debit card transactions is practically unlimited. You have until 60 days in which to file a report of a stolen or stolen credit card under the EFTA. After that, you simply lose whatever money was taken, even funds siphoned by linked account. The specific liability limits for the EFTA are:
Lost or stolen card reported prior to unauthorized transactions: no risk of liability.
Lost or stolen card filed within two days Limit of liability $50.
Card stolen or lost reported within 60 days: $500 liability limit.
After 60 days: no protection.
It's important to know that if your credit card isn't physically lost or stolen, you are entitled to the right to make a claim within 60 days of fraudulent transactions, with no liability. If only your card number is stolen, 60 days begin on the date on the statement in which the fraudulent transaction appears.
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Credit card fraud
Under the FCBA the maximum liability for fraudulent transactions on credit cards is $50. If you report your card lost or stolen before fraudulent transactions occur, your liability is zero. Many credit cards promise zero liability for all fraudulent transactions.
"I've had my credit card information stolen and used fraudulently a numerous instances," says Tucker Spillane, a 24-year-old credit analyst from New York. "Fortunately my credit card issuer almost always notices the fraud immediately ... generally because the activity is considered different from my normal spending practices. And they provide their own fraud protection anyway. I've never had to pay a dime."
The main difference between a debit and a credit card in relation to fraud lies in the way you can get your money back. If you are victimized by a fraudulent transaction on your credit card you will not lose any money. You can report the fraudulent transaction and receive a credit on your account statement. it is not going to affect the balance of your bank account.
If you have a debit card, the 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 headaches. Fraudulent charges could bind funds so that legitimate charges are denied or result in overdrafts.
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If you don't have a credit card...
Although credit cards are a safer option for online purchases, it's possible that you do not have access to one. In this case, there are still ways to safeguard yourself against fraud.
Maintaining a low balance in the account linked to the debit card that you use for online purchases can limit the size of withdrawals that are fraudulent when they occur. This won't necessarily prevent someone from accessing your account, but it could minimize the damage that is done.
You may also want to turn off any type of (should you already have the feature) your account you use for purchases. Many banks offer this feature (usually on an account that is a checking one) which will automatically take money from savings accounts in the event that the checking account is overdrawn. If a fraud occurs it means that the criminal has access to two accounts instead of one. If you do have overdraft protection , make sure to inquire with your bank about what and when it's applicable.
Another way to limit your liability is using an credit card that is prepaid. If someone gains access to the account, they'll gain access only to the amount you've loaded on the card.
The bottom line
From a legal perspective, credit cards generally provide more protection against fraudulent activity. However, there are ways to imitate certain of these security features using the use of a debit card or prepaid card. Deciding which is best for you can help safeguard your funds whether you're buying on the internet or in a store.
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