Credit cards offer a variety of benefits for holders. These features include the ability to pay over time, make purchases without cash, and pay for transactions around the world. Debit cards have a similar look and use, so it’s easy to think they are practically the same thing as credit cards. But there are key differences – especially with safety and security. So, are credit cards safer than debit cards?
How Credit Cards and Debit Cards Are Similar
Credit cards and debit cards have several things in common. Both options allow the user to pay for goods without cash, resulting in less potential exposure to bacteria or viruses. Both also feature similar payment networks. Visa and Mastercard are the most popular, giving them near-universal acceptance. However, Discover and American Express are also considered payment networks as well as card issuers.
Because both debit and credit cards share the same payment network, it’s easy to think they share the same security features, such as fraud protection or purchase protection. This, however, isn’t the case.
Credit Cards Offer Greater Fraud Protection
Credit cards offer the protection that comes from a chargeback – something debit or prepaid cards can’t provide. A chargeback is a form of refund where the card issuer refunds the purchase price to a cardholder at the cardholder’s request. Unlike a merchant-initiated refund, chargebacks allow credit cardholders to regain their money from an unscrupulous or dishonest merchant.
According to Christina Tetreault, manager of financial policy at Consumer Reports, this protection is one of the best reasons to opt for a credit card and keep that debit card in your wallet:
“If the merchandise doesn’t show up or more likely shows up, and it’s not what you wanted, it’s not what was described, or it’s broken, and if the merchant won’t help you out, you still have the right under law to get that money back through the credit card provider.”
Debit Cards Offer Some Protection
That is not to say that debit cards offer no protections for unauthorized or fraudulent charges. According to Consumer Reports, most debit cards protect unauthorized purchases for up to 60 days after a transaction – provided you notify the bank or credit union.
Even with these safeguards, however, experts warn you may struggle to get your money back. Ed Mierzwinski, senior director of the Federal Consumer Program at U.S. PIRG, a consumer advocacy group, says many banks are hesitant to compensate customers for fraudulent or unauthorized charges.
“The banks are stingy with giving you your money back when they think they can get away with delaying it or convincing you that it’s your problem and not their problem,” he says. “You try to dispute a transaction, and the bank throws sand in the gears.”
The bottom line is that debit cards might not always be the best option when making purchases. However, debit cards do offer the benefit of linking to a checking account, making it easier to monitor expenses. But the reduction of purchase protections places them at a disadvantage over a credit card.
Of course, using a credit card means exercising financial responsibility by only purchasing what you can afford to repay. Credit cards incur interest – something debit cards avoid. For those willing to go the extra step and carefully plan their purchases, however, a credit card provides peace of mind – and more purchasing flexibility – in one package.
Related Article: Credit Vs. Debit: Why You Should Choose Credit
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