When to use a credit card instead of a debit card

Local News

KNOXVILLE, Tenn. (WATE) – A debit card is a lot like cash. The minute you check out is essentially the minute that money leaves your bank account. Using debit cards can be risky, too. They don’t offer a lot of financial protection.

1. Online shopping

It’s safer to pay with a credit card when shopping online, according to the Federal Trade Commission, the FTC.

If a cybercriminal intercepts your debit card number, they can immediately drain your account. On the other hand, credit cards come with protection. The Fair Credit Billing Act protects credit card transactions. The federal law generally limits your responsibility for unauthorized credit card charges to $50. You can dispute billing errors and withhold payment while your creditor investigates the disputed charges. 

2. Gas pumps

Gas stations with lots of fuel pumps can be hot spots for criminal activity.

Skimmers are illegal card readers that criminals can attach to payment terminals. If you must use a debit card, the FTC advises running it as a credit card. When you use a debit card as a credit card, you won’t have to enter the PIN, which helps keep your PIN safe, and the money won’t be immediately deducted from your bank account.  According to Visa, millions of dollars in payment fraud across the country occurs at fuel pumps.

3. Hotels

When making hotel reservations to secure your room reservation, hotels will put a hold on your payment card. By using a debit card, the hotel takes that money out of your account immediately. 

If you must use your debit card make sure you have enough money in your bank account not only the room, but for taxes and incidentals which makes the temporary charges higher than you’ll actually be paying in the end. With a credit card, the incidentals deposit is merely a hold on your credit card. 

4. Car rentals

If you don’t have a credit card, renting a car with a debit card will likely cost you more than the daily fee. Some Avis, Budget and Hertz locations, for example, perform credit checks on many customers who rent with a debit card, according to their websites. That can ding your credit score. Some car rental companies might also place a hold on your debit card.

5. Furniture delivery

Have you ever had new furniture delivered, only to find the corners dinged or the upholstery stained? If you paid with a credit card, and there is no resolution for the damages, 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.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

WATE 6 On Your Side Twitter