Credit Cards or Debit Cards: What Is the Safer Choice?

If you are not updated on the news, let me speed you up a little bit. It was announced a few weeks before that Target’s databases have been violated by some hackers. Now, what does it mean? Well, this implies that any person who shopped from Target from their credit cards or debit cards between the dates 27th November till 15th December, they have had all their payment information got stolen!

This information that has been stolen includes the PINs of the debit cards and unfortunately all that information was sent to the so called famous black market websites for sale. Due to this, there have been several reports already filed from the people who were the victims of this credit cards or debit cards fraud caused by the breach. This is really bad news.

Credit Cards or Debit Cards

However, the good news also exists. You will be glad to hear that most likely you will not have to lose even a dime of the money credits to the 2 federal laws that cap the liability for such debit and credit card related fraud.

Well, still the question remains about the comparison of safety of credit cards or debit cards. People want to know that which of the two cards is safer for them considering all circumstances.

Budget Control

If you talk about budgetary control, there remains no further question that the debit card is the obvious winner. As a debit card allows you to spend only the amount of money that you already have in your account, so you would have no chance at all of getting into any debt. Debit cards however don’t restrain you from spending on unnecessary items, all they will do is it cap your downside in case you have a lack of self-control.

Usability

If you talk about the usability of credit cards or debit cards, credit cards will most certainly win the battle. Sometimes, debit cards be a problem when you use them for travel related expenses such as rental cars, hotels or gas payments.

Merchants for such payments mostly place a ‘hold’ on the funds that are in your account that are above the actual amount of money that you are going to spend. When your funds are on hold, you cannot use them to pay for any other transaction. This can result in causing you an overdraft and then you will have to either ‘swipe’ declined or you can be assessed & overdraft fee.

On the other hand, credit cards have no such problems and also have an enough and sufficient limit to their credit so that they can pay for other purchases and complete their transaction even if some amount is being held from your credit limit. Once you have returned the rental car or checked out of the hotel, the amount will be adjusted to the amount you actually spent and finally the transaction will be posted.

Fraud

When you talk about the fraudulent use of credit cards or debit cards, people are learning more because of the incident of Target, credit cards are way behind the race.

If on a credit card you have your liability that is capped at fifty dollars, the 4 major networks of credit cards have no liability policies that will make sure that you would not even be paying the fifty dollars. On the other hand, if the liability of a debit card is capped at fifty dollars, unless you have not reported a fraud within a two days limit, your liability will jump to 500 dollars.

Moreover, if you report a fraud, all your money in the checking account can be taken away! Even if you are able to get back your funds by an issuing bank eventually, this will not solve all your problems because those were supposed to be in the account to clear your other various transactions. Also, when you are arguing with your bank to get back your money as it were YOUR money, in the meantime, other transaction might not be clear.

So, when the other transaction cannot clear, you will most likely find yourself paying late fees or over limit fees on items like rents or other obligations that were past due.

Furthermore, another problem that you can use debit cards is that they want you to keep too much money in the checking account. You will have to maintain a sufficient amount of money to pay your bills such as student loans, cars or rent along with maintaining money for cell phones, utilities or even sometimes for shopping or mad cash.

So thousands of your dollars are at a risk every month, unnecessarily. Unless you are moving your money from money market account or another savings account, every penny in your account stays at risk because of the common debit card fraud.