Five Times Where a Credit Card is More Useful Than a Debit Card
Debit cards may be convenient and do not affect your credit score, but for some purchases, they can expose you to unwanted scammers. While credit cards have built-in security features to protect your money, debit cards often cause bigger trouble when fraud occurs, from freezing an account to losing thousands of dollars without noticing.
To protect your assets and have comfort spending in the future, use a credit card at these five places below instead of a debit card, and learn the reason behind the switch.
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Gas Stations and Convenience Stores
Fuel pumps and point-of-sale terminals are constant targets for skimming devices that grab card data and PINs. It happens so often that the FBI reports that over $1 billion is lost to skimming and other fraud tactics.
Instead of using your debit card, use a contactless or chip-enabled credit card or pay inside to keep your card in sight. When you get to the pump, also check for any signs of tampering and monitor your accounts after going, just in case you need to report any suspicious transactions.
Travel Booking: Flights, Hotels, Rentals
Travel bookings will often trigger holds, pre-authorizations, or incidental charges on your card. With a debit card, this could mean a sizeable chunk of your checking account is untouchable as your cash is directly connected to the purchases. However, with a credit card, they avoid tying up funds and add additional protections to each purchase.
If you travel frequently, a travel-focused credit card is the best way to go, as many offer points for travel when making purchases, trip delay reimbursement, baggage delay, and rental collision damage waivers. Always research, though, to find the best card for your travel needs.
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Shopping Online
Shopping online, especially with smaller retailers, can be risky with a debit card. Even reputable and well-known retailers can struggle with data breaches. Debit cards are especially susceptible to this fraud because the scammer instantly has your checking information and can pull money instantly from your account. Plus, getting the money back takes time and keeps it away from your pockets.
Credit cards or virtual card numbers are a much safer option, and provide extra security if you happen to fall into a data breach. Credit cards can also give you stronger dispute leverage and keep your money while the charge is being investigated.
Big Ticket Purchases
Larger purchases, such as electronics, appliances, and furniture, can be costly if you don’t have the right warranties and purchase protections. These help protect your money if the pieces come damaged or if someone scams you when ordering online. A debit card does not usually offer extended warranties, purchase protection, or price protection that many credit cards do.
Instead, place larger purchases (that you can afford to pay off) on a credit card and take advantage of those extra protection plans. Plus, keep your receipts and a record of the card you used, just in case the worst happens.
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Bars and Restaurants
Busy restaurant and bar settings can be a stomping ground for cards to be copied or skimmed, especially when you hand the card over to your server. If the card is a debit card, the charge will immediately be withdrawn from your checking account. Instead, have the card run in your presence, or use mobile/contactless payment if possible.
If the card must be taken to a point-of-sale register, then setting up transaction alerts on your phone may be the best choice when looking out for scammers.
Tips to Follow When Getting Scammed
If you unfortunately get scammed, here are some tips to follow to get your money back:
- Report the fraudulent activity immediately, or as soon as possible. If you report a lost or stolen debit card before it’s used, you are not liable. The longer you wait, the higher the liability goes.
- New accounts or complex cases will take longer to investigate, ranging from 10 to 45 days to resolve. Prompt reporting and documentation improve your odds for recovery and recovery time.
- Ask for provisional credit if your claim meets the requirements.
- Keep records of when purchases become questionable to help the investigation.
- Escalate the situation if needed, such as if your issuer’s response stalls.
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Habits to Reduce Risk
- When making purchases that pose a higher risk for fraud, favor credit over debit to potentially prevent locking up significant funds.
- Use contactless or chip payments rather than swiping your card. Enable real-time transaction alerts on both credit and debit cards to spot fraud early.
- Use virtual card numbers for online shopping when your card offers them.
- Review statements and mobile notifications regularly about large or questionable transactions.
Debit cards can be useful when it comes to ATM withdrawals, small everyday purchases, or situations where you must pay from a bank balance. However, these transactions may expose you to skimming, holds, or disputes that tie up your cash. Instead, consider signing up for a credit card and adding protection to each payment, along with possible rewards when using it.