KNOXVILLE, Tenn. (WATE) – Debit cards don’t offer a lot of financial protections and using them can be risky.
A debit card is a lot like cash, transactions are instantaneous, so the minute you check out is essentially the minute that money leaves your bank account.
Here’s why using a debit card can be risky:
Using your debit card for online purchases can be risky. The Federal Trade Commission, FTC, says it’s safer to pay with a credit card when shopping online.
If a cybercriminal intercepts your debit card number, they can immediately drain your account.
On the other hand, credit cards come with more protection. For example, Under the Fair Credit Billing Act the federal law generally limits your responsibility for unauthorized credit card charges to $50.
Filling stations can be hot spots for criminal activity. Earlier this year, the FTC warned travelers about the use of card skimmers at gas pumps.
Skimmers are illegal card readers that criminals can attach to payment terminals.
Fuel pump payment terminals are attractive targets because they are not manned by employees. Though not a completely risk-free option, a credit card is safer for buying gas.
When you are eating out allow your debit card out of sight for a few minutes, and it could end up in the wrong hands — or in a card skimmer.
So, try to use cash or a credit card when at restaurants unless your waiter or waitress brings a handheld payment system to the table so your plastic never leaves your sight.
Have you ever had new furniture delivered, only to find the corners dinged or the upholstery stained?
If you paid with a credit card, you could dispute the charges and get your money back. Again, the Fair Credit Billing Act gives you the ability to dispute credit card transactions and to withhold payment while your credit card company investigates. Unfortunately, it’s not the same with debit card transactions.
In the age of meal-delivery services, and auto-ship programs you may be tempted to set it and forget it.
You simply put your debit card on file, and the company automatically charges you on a recurring basis.
But if you don’t tally these expenses into your monthly budget, your bank account might end up in the red. To avoid overdraft fees, use your credit card for automatic recurring expenses.