Shopping online is convenient and offers great deals, but it leaves you vulnerable to hackers and data breaches. Criminals are constantly trying to hack into the databases of online retailers to access consumers’ personal information and credit card information.
It is important to protect yourself online, and that includes determining how to pay for purchases made online. It is important to know which method of payment is safer when using debit or credit cards.
Credit cards offer better protection for online shopping in a few important areas.
If your credit card information is stolen online, which card is more vulnerable – your credit card or your debit card?
Debit cards are linked to bank accounts, which contain real money. A thief who gets his or her hands on your PIN can use it to withdraw cash from your bank account. Even if they only charge your card for charges, these charges can quickly empty and even overdraw your account.
Credit cards, on the other hand, do not touch your actual funds, so fraudulent charges won’t affect your finances in the same way.
Federal legislation protects consumers from fraudulent charges – the Fair Credit Billing Act (FCBA) for credit cards and the Electronic Fund Transfer Act (EFTA) for debit cards. But these laws do not equally protect credit cards and debit cards.
In the EFTA, you are not responsible for any fraudulent charges if you report your physical ATM or debit card stolen before it is used. The same holds true if your debit card number, but not your physical card, is stolen, as long as you report fraudulent transactions within 60 days. You could be fully liable if you fail to identify and report a fraudulent charge within that 60-day window.
You will never be liable for more than $50 in unauthorized charges on your credit card under the FCBA. If you report the theft of your card before the charges happen or if it’s the number of your card rather than the actual card, your liability drops to $0. As a matter of fact, many credit card companies will waive the $50 fee anyway.
It is also more difficult to recover from fraudulent charges with debit cards.
If you use a debit card, you may have to wait while your bank investigates and refunds fraudulent charges. In the meantime, you may not be able to pay your bills, make purchases, or keep money in your account. This is because your actual money was spent on purchases.
Your financial situation will not be adversely affected by reporting fraudulent charges to your credit card issuer and waiting for a statement credit.
The Bottom Line
Although both payment methods have some legal protections, credit cards have a few distinct advantages. Your real bank account is not linked to them, and their legal protections are stronger. If you want to guard against theft, you should consider using your credit card for future online purchases and removing your debit card number from existing accounts.
Is your personal information on the dark web? Make sure your identity isn’t at risk!