Is a credit card really safer than a debit card? Should you always default to using a credit card when making online purchases? Do you really need a credit card to keep your finances safe? Contrary to popular belief, debit cards offer the same fraud protection as credit cards. So why is there so much disinformation out there about debit cards being unsafe?

What Does the Law Say

The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offer protection for lost or stolen credit, ATM, or debit cards.

Credit Card Protection:

• Liability for fraudulent charges tops out at $50.
• If the card is reported lost or stolen before the fraudulent charges are made then there is no liability for those charges.

Debit Card Protection:

• If the card is reported lost or stolen before the fraudulent charges are made then there is no liability for those charges.
• If the fraudulent charges are reported within 2 business days of being made then the maximum liability is $50.
• If the fraudulent charges are reported after 2 business days then the maximum liability is $500.
• If the fraudulent charges are reported after 60 days then you are liable for all the fraudulent charges.

Yikes! No wonder why people are hesitant to use debit cards. You could potentially be on the hook for fraudulent charges if you don’t report the charges within 2 days! If you don’t catch the fraudulent charges within 60 days then you won’t be able to recoup any of the lost funds.

However, the debate doesn’t stop here.

Visa and Mastercard Debit Cards

If you have a debit card you may notice it says Visa or MasterCard. This means you have added protection on your debit card. Visa’s debit card security policy is a follows:

• Visa’s Zero Liability Policy protects you from unauthorized charges. Any funds taken from your account due to fraudulent use will be returned to your card.
• Continuous fraud monitoring to detect suspicious activity on your debit card.
• If your Visa Debit card is lost or stolen and fraudulent activity occurs, you are protected by Visa’s Zero Liability Policy. That means 100 percent protection for you. Whether purchases occur online or off, you pay nothing for fraudulent activity.

However, these protections may not extend to ATM withdrawals or transactions that were purchased using a PIN number. This is why it’s important to never write down your PIN number and always run your debit card through as a credit card (choose the credit option on the machine and don’t enter your PIN at the store).

Additional Protection

If you are still hesitant to use a debit card then you can add an additional layer of protection. Here are some examples:

• Use a debit card with a chip: These chips send out randomized card numbers whenever used at the store. This keeps your card number safe in case of card reader hacks.
•  Get debit card alerts: Many banks offer alerts whenever your card is used. This can come in the form of a text message so that if a fraudulent transaction occurs you can call the bank immediately to stop further charges.
• Set spending limits: You can set spending limits on your card so fraudulent transactions can’t exceed predetermined thresholds. For example, you can set a $200 limit on your card so that large fraudulent transactions can’t occur.

With all that being said, using a debit card can be just as safe as using a credit card. With the proper steps you can avoid losing funds to fraudulent charges while enjoying the convenience of a debit card.

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