Even if they both offer fraud protections, credit cards are generally safer than debit cards for several reasons: Credit cards can keep your money safe.
In general, credit cards offer better fraud protection. If someone skims your credit card information, for example, you have time to dispute the charge before you're liable for the payment and the pending charge may never even post to your account.
But like credit cards, debit cards are vulnerable to rip-off artists. And debit card fraud is particularly scary because thieves can withdraw money directly from your checking account. Here's how debit fraud happens and how to protect yourself.
Credit cards offer better consumer protections against fraud compared with debit cards linked to a bank account. Newer debit cards offer more credit card-like protection, while many credit cards no longer charge annual fees.
Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.
While credit cards can carry high-interest rates, debit card purchases can cause you to pay exorbitant fees if you aren't paying attention. Debit card transactions are deducted straight from your checking account. If your purchases end up overdrawing your account, you'll face substantial overdraft fees.
Some ATMs will charge withdrawal fees, and if you use more than the agreed overdraft limit then the fees tend to be much greater than those incurred by credit card usage. Another disadvantage of debit cards is the fact that they have limited funds, which can slow down business.
Thieves can obtain your card number, expiry date, and security code using different techniques. They can use skimming devices placed on ATMs or point-of-sale payment terminals or phishing scams where they trick you into revealing your card details or hacking into databases that store card information.
Swindlers often use copycat websites to trick you into entering your credit or debit card number alongside a CVV number. They may attempt to bypass CVV codes through various methods, including phishing scams, skimming devices, and using stolen card information.
Fraudsters can get ahold of your card details in a few different ways—one of them being through an ATM card skimming device. Nefarious parties can also gain access to old bank statements or debit cards, or direct you to make a payment on a fraudulent website that collects your details.
Fraudsters can still use your debit card even if they don't have the card itself. They don't even need your PIN—just your card number. If you've used your debit card for an off-line transaction (a transaction without your PIN), your receipt will show your full debit card number.
The most common scams are card skimming, phishing, and taking photos of cards. According to convicted identity thieves, their least favorite cards to steal are American Express cards -- because they require a ZIP code to finalize a transaction.
My debit card has been used fraudulently
The regulations state you must be refunded immediately if you've had money taken from your account without your permission. You must report the loss of your debit card, or any unauthorised payments, as soon as possible.
Debit cards aren't the safest way to pay online. Features like 3D Secure, CVV, and OTP (one-time password) verification help boost security to some extent, but safer alternatives exist. Credit cards make it easy for you to reverse transactions while prepaid cards help keep your personal information off the internet.
Payments with a debit card are taken instantly from your checking account and shopping online comes with the added risk that your information may be stolen. Using a debit card opens up the possibility that the thief will gain access to the funds in your checking account.
A debit card lets you spend money from your checking account without writing a check. When you pay with a debit card, the money comes out of your checking account immediately. There is no bill to pay later.
Debit cards have multi-layers of security
It's called an EMV chip, and paired with a debit card, the two make an EMV card, and the chip provides consumers with additional security when making transactions at stores, points-of-purchase, or ATMs because they're hard to skim.
Your bank should refund any money stolen from you as a result of fraud and identity theft. They should do this as soon as possible - ideally by the end of the next working day after you report the problem.
PINless debit card fraudulent transactions can occur if your card gets stolen or someone copies your credit card details. Although a thief can't withdraw cash or get cashback at a store without the pin, they can still go on a shopping spree with it.
When your debit card is used fraudulently, the money goes missing from your account instantly. Payments you've scheduled or checks you've mailed may bounce, and you may not be able to afford necessities. It can take a while for the fraud to be cleared up and the money restored to your account.
You should only keep items you need in your wallet, like your driver's license, credit and debit cards, and your health insurance card. On the other hand, you should avoid carrying items like your Social Security card and your birth certificate with you unless you need other forms of ID.
Although you can use a debit card or a credit card as a method of payment almost anywhere, in certain places like hotels and restaurants, it is recommended to use a credit card. In general, you can make a payment safer by choosing the method of payment according to the place where you're completing a transaction.
It's best to be wary of using your debit card for online transactions, whether for bill pay or online shopping. If nothing else, it's more difficult to dispute a fraudulent purchase made with a debit card than it is for one made with a credit card.