From what I remember when my ATM cards were switched over to debit cards, there are protections in place for stolen credit cards that aren’t legally required for stolen debit cards. All the ones I’ve had though, AFAIK, the issuer’s policies have matched the credit card protections. Theoretically, the debit card issuer could offer lesser protection than is required for credit cards.
Personally, I have no idea why people think there’s an advantage to debit cards as opposed to credit cards.
My thinking is, that if something goes wrong and someone empties my checking account, I’m going to be without cash for some period of time until my bank figures it out.
If someone makes a boatload of fraudulent charges to my credit card, then I’m only bothered by the inconvenience of showing that I didn’t make the charges.
Combined with the fact that, as a user, the use of a credit card and debit card are completely interchangeable, I don’t know why people choose to use debit cards. In fact, I’ve noticed some places where I don’t even have to sign anything if I use my AmEx, which I pay off every month anyway.
So, yeah, I see no reason to use a debit card, and some risk to doing so.
Yes, Canada is switching to Chip and PIN… but in Canada we haven’t had Visa- or Mastercard-branded debit cards either until very recently.
Canadian debit cards have their own system called Interac, and have been online-only with PINs since the beginning. They evolved from banking/ATM cards, not credit cards, and were never used with a signature.
It took a lot of reading on the Dope before I sorted out what US types meant by 'check cards" and “debit cards”. Just different enough to be confusing.
And I’ve never had debit-card fraud either, though last year the bank called me and said they were sending out a replacement debit card because my card had been used at a place where fraud had been reported. I had seen no unexpected charges on my card.
We have just had another layer of security added to our debit and credit cards. With my bank it’s called “Verified by Visa”. Whenever I make an on-line purchase with my cards I get redirected to my bank’s website where I have to enter a password to complete the transaction. This prevents anybody who has either stolen the card, or tries to use the card details (number, security code and exp. date) from carrying out a fraudulent transaction.
As soon as my credit union offered debit cards, they included $0 obligation fraud protection. When mine was stolen, I got all the money back within a couple of days. (They didn’t wait until it was legally required, like many banks did.)
I dislike that it can be used as a credit card with a signature, but whatdya do. If transactions had required a PIN, the thieves wouldn’t have gotten anything.
I believe they also do still offer just an ATM card, if you don’t want a debit card.
My issue with debit cards is that even if the balance get fixed later, my money’s still temporarily missing from my account. I’m just not comfortable with that, even if it gets worked out in the end. Since there are no downsides to a credit card that gets paid off monthly, that makes it the better choice for me.
Additionally, I’ve heard some horror stories about authorization holds on debit cards, specifically relating to purchasing gas and renting hotel rooms. When you swipe your card at the pump, some places will authorize it for $100 or so. That money will still be in your account, but it’ll be unavailable until the final transaction clears. $100 out of a vaguely large credit limit is nothing. $100 out of the checking account of someone who’s hit a rough patch and only has a couple hundred bucks can be devastating. Not strictly a security issue, but it’s still a concern for debit cards.
From the linked article:
So far as I know, this is still the case, which is why I’ve never used a debit card in my life. I fail to see any advantage of a debit card over a credit card, only disadvantages. Banks send out modifications to my credit card agreements all the time, but these modifications are limited by law. If I had a debit card, I wouldn’t want to find out after the fact that a potential loss was not covered because of some agreement modification I missed.
Also, with a debit card, you have to keep track of your balance to avoid overdrawing your account. With a credit card, I don’t have to worry about this. (My credit card limits are much higher than my bank account balance.)
Also, with credit cards, I get a “float” if I pay off the balance every month. With a debit card, the money comes out immediately.
All in all, I prefer using credit cards and paying them off every month.
The “advantage” to debit cards - though mine I believe is an ATM card, as I always have to put in a PIN - is some of us don’t trust the credit card companies as far as we can throw them, we don’t trust ourselves with credit cards, and we know it’s better not to have them. We don’t trust the banks much either, but we need to have some place to put our money and under our mattress just won’t do.
I use debit cards, but in my case it’s completely a matter of financial discipline. A debit card doesn’t let me spend money I don’t have. For people who can keep up with a credit card, it’s probably better from a practical standpoint. I can’t, so I don’t allow myself the temptation.
Mark us down as more people who do not have credit cards. Not because we don’t trust ourselves, but other than the house, and used cars we do not buy anything we don’t have the money in the bank for. My very first roommate was a loan officer in a bank and when I was living with her she had a $30 000 debt thanks to credit cards [and she really should have known better :eek:] so was eternally broke as most of her income was going to pay off her card debt. Excellent example of what NOT to do!
We actually are pretty moderate in our expenses - rather than going out all the time, we have all the cable channels and use netflix. We would rather go one one nice vacation a year than go out to dinner every week. We are both accomplished cooks and prefer to buy good quality ingredients and cook at home. [tonight is lasagna, with the sauce homemade, and the pasta homemade on my atlas pasta mill 
]
With a debit card you can’t spend money you don’t have (until the banks started installing “overdraft protection” that would suddenly let you do that for massive fees, often without telling the card holder, but that’s being fixed).
On the other hand, as we have seen in this thread, not only do banks and credit unions typically credit stolen money back, but the bank often discovers the charges before the customer does and takes action.
I haven’t had my card stolen, but I did encounter a malfunctioning ATM that said it gave me $200 when it had given me nothing. I called my bank and had a $200 credit in my account in 10 minutes. (Of course, if their investigation found against my story I would have had to repay the money… but since I was in the right everything was OK).
Granted, that sort of promptness could change, but debit cards in practice have much the same protections as credit cards. If you’re so worried about your debit card attached to your checking account why do you still have paper checks? They, too, can be stolen, altered, involved in fraud, etc. All of these forms of money have their advantages and drawbacks, but none of them leave you completely bare to risk, either. Only cash - which, when stolen, can never be recovered short of clubbing the their over the head and riffling through his pockets - truly leaves you at risk of unrecoverable loss.
Actually, there are circumstances where you could be held liable for such charges, such as not reporting them promptly. Your credit rating could also take a hit while you’re sorting everything out.
For people who have just gone through, say, a bankruptcy or have bad credit or who are sorting out identify fraud and can’t get a credit card a debit card allows them to engage in financial transactions as if they had one (except I think you still can’t rent a car with a debit card). Of course, this may not be something you, personally, ever have to worry about.
The huge risk to debit cards is that fraudulent use can cause your bank balance to go to zero. Yes, the bank will reimburse you for the charges, but they won’t help straighten out any of the problems from your own checks bouncing because the balance is zero. They won’t
- Contact your mortgage company to reverse the bad check/late payment fee
- Contact your credit card companies to lower your rate after they bumped it up because you bounced a check. And added late fees. And started charging interest
- Contact grocery stores where you bounced checks to get you off the hot check list
- etc etc etc
You’ll be left with a huge hassle trying to straighten it out all the secondary problems. Compare that with a stolen credit card. A stolen credit card means a 5 minute conversation with a rep where you state which charges are invalid and you’re done.
There are some minor financial reasons why you might use a debit vs credit card, but the huge downside to a stolen debit card means it’s very risky to use.
At the risk of repeating myself, all the above would be avoided if the US banking system follows the example of many other countries, and adopts a chip and PIN system on debit cards. What’s holding them back?
Six years ago, I bought a DVD-ROM drive from an online seller I found on pricewatch with my debit card.
The outfit turned out to be shady, but the bank/Visa refunded the $250 or so I’d paid without hassle.
They also call me if there are charges they think are sketchy and have me verify them- I think I’ve had one that wasn’t me in almost 10 years of having used a debit card, and it was for $10.
I’m not too worried; my checking account isn’t the primary repository of my money anyway. While it would suck to lose it, it wouldn’t be a crippling deal.
The companies issuing credit cards have no financial incentive nor legal obligation to increase security on these cards. They’re in it for THEIR profit, not to protect their customers from fraud.
I still don’t understand their system. All I know is my cards work in Canada and the US, and I’m good with that. 
They are scared of universal health care.
More seriously, the USA’s banking system is pretty loose, with a lot of little banks and little coordination.
Note that Chip and Pin is not secure. There’s a viable man in the middle attack.
Now, they still might be better for general security than credit cards (which have little authentication), but it introduces a set of incentives I don’t particularly care for.
The more trusted the authentication system is, the less protection is afforded to the defrauded individual in the case of failure. Let’s take credit cards for example. If my credit card is stolen, it’s true that the thief can make off with a bunch of money. But I get it back, and I don’t particularly have to jump through many hoops, because it’s obvious to everyone that credit cards are not secure. If my chip and pin card is stolen and cracked, I have a much higher burden of proof. If the crack is not known and the system is expected to be secure, I might be out of luck entirely.
Since I have no intention of fraud, I am better served by the card that is known to be unsecure, rather than the one that is assumed to be secure.
Broomstick, that’s not entirely true. Credit card companies eat a lot of losses to credit card fraud. It’s just that, generally, those losses are less than the profit they’d lose if they required better authentication at the time of purchase.
Just to add, both debit and credit cards are chip and PIN on this side of the pond.
The problem with debit cards linked to bank accounts is auto bill payment
For example, you have $500 in bank. You go on Monday night to pay bills and pay 5 bills for a total of $450.00.
Then your card is stolen Monday night and the thief steals $450 out of your bank account
Now you may have the five bills you paid, bouncing checks. This of course depends on how soon the companies take the money out or try to take it out.
A bounced payment can cause unlimited grief. You can be charged an NSF on from the person you tried to pay the bill for. Then you could also be liable for higher interest rates from the company that had the check bounce on.
So it’s not just a simple matter of getting your money back. It can have a snowball effect too.