Credit Cards Are Safer
If you ever have money taken from you, you should hope it’s taken from your credit card account and not from your checking account. While credit card companies may charge exorbitant interest rates and have outrageous penalties for late payments, credit card companies are usually much quicker than banks when it comes to taking care of you in cases of fraud or theft.
In fact, if you’ve ever used your credit card in an unusual manner (perhaps you use a card you haven’t used in a few months), you may have received a call from the credit card company seeking to verify that you indeed made the odd purchase. If you do the same with a debit card, you will probably not get a call to check on the charge. And if someone else is using your debit card, you probably won’t know it until you get your bank statement or review your account online between statements.
Debit card fraud is real. One of my favorite consumer blogs is written by Bob Sullivan, MSNBC’s Red Tape Chronicles. In ‘Money disappears from checking accounts, again’, Sullivan writes of how thieves have been able to use debit and ATM card numbers to take money out of checking accounts.
When a bad guy uses a debit card or debit card PIN to steal from your checking account, your money actually disappears from the checking account. You have 60 days to report the theft to your bank. If you wait more than 60 days you lose your right to expect the bank to make it right. And while you and the bank spend weeks or months working out the details of what happened, you’ve lost access to your money. It was effectively stolen.
A credit card company, however, will remove charges from your card that are fraudulent. While you may be required to fill out a police report and fax it to your credit card company to document the theft, your bank may not be so willing or quick to help you without hassle.
Debit cards are good for over-spenders because you’re not borrowing money or paying interest when you debit your checking account. Read the ‘Money disappears …‘ article and decide whether debit or credit cards are better for your ability to tolerate financial risk.
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