Credit Card vs Debit Card for Everyday Use

[Doctor_Jackson]

@LSLGuy

As others have said above: If you can use a credit card responsibly, then there is no comparison. Debit cards put all theft & fraud risk on you, none on the bank. Credit cards are the reverse: you’re protected and the bank’s on the hook.

That was true when debit cards first came out, but the Federal Electronic Funds Transfer Act now limits consumer liability as follows:

Lost or Stolen ATM or Debit Cards
If your credit card is lost or stolen, you can’t lose more than $50. If someone uses your ATM or debit card without your permission, you can lose much more.

If you report an ATM or debit card missing to the institution that issues the card before someone uses the card without your permission, you can’t be responsible for any unauthorized withdrawals. But if unauthorized use occurs before you report it, the amount you can be responsible for depends on how quickly you report the loss to the card issuer.

If you report the loss within two business days after you realize your card is missing, you won’t be responsible for more than $50 of unauthorized use.

If you report the loss within 60 days after your statement is mailed to you, you could lose as much as $500 because of an unauthorized transfer.

If you don’t report an unauthorized use of your card within 60 days after the card issuer mails your statement to you, you risk unlimited loss; you could lose all the money in that account, the unused portion of your maximum line of credit established for overdrafts, and maybe more.

If an extenuating circumstance, like lengthy travel or illness, keeps you from notifying the card issuer within the time allowed, the notification period must be extended. In addition, if state law or your contract imposes lower liability limits than the federal EFT Act, the lower limits apply.

Once you report the loss or theft of your ATM or debit card to the card issuer, you’re not responsible for additional unauthorized use. Because unauthorized transfers may appear on your statements, though, read each statement you receive after you’ve reported the loss or theft. If the statement shows transfers that you didn’t make or that you need more information about, contact the card issuer immediately, using the special procedures it provided for reporting errors.

True, though, it may still take several days (up to 10 by law) to straighten out a checking account if debit card fraud occurs and that can be a major PITB.

[filmore]

You’re much safer using your CC rather than your Debit card. If your CC gets compromised, all you need to do is call the CC company and they remove the charges. If your Debit card is compromised and your bank balance goes too low, the fraudulent charges may be the least of your concerns. You may not be able to use your Debit card until the bank corrects the charges. Automatic charges and other payments may bounce or go late, which may trigger penalties and higher interest on your accounts. You may have to contact many different companies and plead your case to see if they’ll agree to waive the penalties.

For example, say your CC automatically drafts from your checking account. If hackers drain your checking account, the CC charge could bounce and the CC company will assess fines and move you to a higher interest rate. It’s totally up to the discretion of the CC company to wave those penalties and will have nothing to do with the bank refunding the fraudulent charges.

[RealityChuck]

If you pay off the CC every month, and don’t pay a yearly fee, then it’s CC all the way.

I put most everything – including my last new car* – on my credit card.

*Paid it off the next month and got a free hotel night out of the deal (in addition to the points I got).

[jtur88]

I have several reasons for preferring a credit card.

1. In case of a dispute, I hold the money on a credit card, they hold the money on debit card.

2. Percent cash back with credit card, along with car rental waiver, trip interruption insurance, etc…

3. Don’t have to juggle funds in order to make an occasional purchase exceeding the accessible balance in that particular bank.

Keep a bank card for ATM use only, never for purchases.

I pay the CC balance online from bank account, but I choose the date and make sure it is covered.