Credit Card Vs. Debit Card: Which Is More Secure Online?

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Credit Card vs. Debit Card: Which is Safer Online?

With credit card fraud the credit card issuer’s cash is at stake. When you are a victim of fraud with your debit card the money you have paid for was stolen.

By Kevin Cash

Nov 9, 2022

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If you typically make use of a debit card to pay for online purchases, you may consider reconsidering. If your card’s information is compromised and transactions are made without your consent You’ll soon discover that credit and debit cards are treated in a different way.

The key difference: With a credit card, the card issuer must fight to get its money back. When you use a debit card you’ll have to fight to get your money back.

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How do you handle fraud

If your card details have been stolen, and possibly fraudulent transactions were made Protect your rights. In the case of credit cards, the most important legislation is known as that of the Fair Credit Billing Act, or FCBA. For debit card transactions the Electronic Funds Transfer Act (EFTA) applies. While these laws offer some similar protections, knowing the differences is key to understanding why it’s safer to use one type of credit card over another.

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Debit card fraud

As per the EFTA the potential liability for debit card fraud is practically unlimited. You are allowed up to 60 days to report a lost or stolen card in accordance with the EFTA. Then, you lose whatever money was taken and even the funds taken by linked account. The exact liability limits under the EFTA are:

Card stolen or lost prior to unauthorized transactions: no responsibility.

Card stolen or lost not reported within 2 days: $50 liability limit.

The card that was stolen or lost is reported within 60 days Limit of $500 for liability.

After 60 days: no protection.

It’s important to know that if the card you have is not lost physically or stolen, you’re entitled to the right to make a claim within 60 days of fraudulent transactions, with no risk. If your card’s number has been stolen, the 60 days begin from the date of the statement where a fraudulent transaction is reported.

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Credit card fraud

Under the FCBA The maximum liability you can incur for fraudulent credit card transactions is $50. If you notify your card stolen or lost before fraud occurs you are liable for nothing. Credit cards typically offer no liability for 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 from New York. “Fortunately, my issuer almost always picks up on it immediately … usually because the transaction is different from my normal spending habits. In addition, they offer fraud protection anyway. I’ve never been required to pay a cent.”

The real distinction between a debit card and credit card in relation to fraud is how you can get your money back. When a fraudulent transaction takes place on your credit or debit card, there is no loss of amount. You can report the fraudulent transaction and get a credit added to your statement, and the problem will never impact your bank account.

With a debit card, your bank account balance is affected from the time the fraudulent transaction occurs. If the transactions are significant they could trigger an effect that is a result of financial stress. Fraudulent charges may entrap funds, causing legitimate charges are denied or cause overdrafts.

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If you do not have a credit card…

While credit cards are a safer option to make purchases online but it is possible that you do not possess one. In this situation there are ways to guard yourself from scams.

A low balance in the account linked to the debit card you use for online purchases can help limit the size of withdrawals that are fraudulent should they occur. While this won’t stop anyone in your accounts from accessing it, however, it could reduce the damage caused by a fraudulent withdrawal.

You may also want to disable any form of (should you have it) your account that is used to purchase. Many banks offer this service (usually for checking accounts) that will automatically draw money from the savings account when the checking account becomes overdrawn. In the case of fraud, this essentially means the crook has access to two accounts instead of just one. If you do have overdraft security in place, make certain to speak with your bank about the best way to use it and when it is applicable.

Another method to reduce your risk is to make use of the prepaid debit card. If anyone does gain access to your account, they’ll gain access to only what you’ve loaded on the card.

The bottom line

From a legal standpoint Credit cards typically 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 will protect your funds whether you’re buying on the internet or in a store.

On a similar note…

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