Money Matters :: Debit or Credit?

Credit or debit?

How often are you asked that question?

Me? Never.

I am never asked, because I don't use a debit card. There is not a debit card in my wallet. When one arrives from the bank I immediately cut it up and dispose of it. Over time I have given up asking banks to refrain from sending one out, but it seems like they just can't help themselves.

For me, a credit card transaction is much safer. Recently out for dinner with a friend while my husband was traveling for work, I paid the tab with my credit card. Before I got home I had an email from the card provider asking that I call immediately. The phone number they offered routed me to security and I had one of those "Uh oh" moments in the microsecond it took for the call to be picked up by a human.

Apparently they thought it odd I had just used my credit card in a restaurant in Florida and I was using it at the moment in a supermarket in California. Notice they were not verifying that I was personally making a purchase; someone was using my actual credit card in a supermarket in California.

When I tendered my card for payment in the restaurant, someone -- I found out later the waitress -- scanned my card and delivered my magnetic strip data to crooks that immediately created a new card and went to work. First they test the card with a small purchase, like a pack of cigarettes. When that transaction clears they try a larger purchase, and when that clears they scale up and so on, until blocked.

I had finished with the human at the credit card company and before hanging up, off-handedly, asked if there were any problems with the other cards; my husband and I use four cards on this same account. The next "Uh oh" moment came when the human at the credit card company replied, "Uh... yes there is." My husband's card was also breached and was being used in a similar way in the same store in the same California city. He was away working in Las Vegas. I still don't know how they acquired his card data.

The card issuer froze the two cards (the remaining two cards were still usable), and issued new ones. One was sent FedEx to me and one was sent FedEx to my husband's hotel in Las Vegas, both arriving early the next day. All the fraudulent transactions were removed from the account, and we went on with our lives. When I use my credit card, the credit card company takes on the liability.

The same thing happening with a debit card has a much different outcome. A fraudster accessing your bank account with your debit card can easily take all your money before anyone notices. That "anyone" will most likely be you when you attempt to use your debit card and find the transaction declined. If you have overdraft protection linked to your checking account, the thief can clean that out too.

Upon your discovery of the problem you will begin the maze of automated menus hoping to be connected to the right person; and so your odyssey begins. When you use a debit card the liability is yours, the loss is yours, and most efforts to restore the funds are yours.

The primary difference between using a credit card or a debit card is whose money is at risk. When a credit card is tendered their money is at risk. When a debit card is tendered your money is at risk. The credit card company has sophisticated detection systems in place to protect their risk. You have a pin number.

So when it comes to credit or debit? Credit. Always.