December 3, 2013 Leave a comment
The recent IS&T article “Tips for Shopping Safely Online” mentions that using a debit card is riskier for shopping than using a credit card. A colleague wondered how much of this was true, so I decided to do a little bit of research. These are some reasons why:
- Payments made with credit cards are charged to the lender, who takes the risk and covers you for fraud. You can make a dispute claim and have the charge removed from your account. You simply decline the charges and don’t have to pay the bill. Debit cards are tied directly to a bank account, so payment is almost instant and charges are billed to you, the client, rather than the intermediary credit lender. Disputing a charge can take weeks to clean up, in the meantime leaving less funds in your account than you thought you had.
- ATMs, where you withdraw cash from your bank account, are the perfect target for thieves. Outdoor ATMs are especially susceptible: the thieves install a skimming device that reads the magnetic strip on the back of the card, thereby stealing your financial information. Gas station payment machines are another place thieves install skimmers.
- Stores are also targets for thieves. In 2009 Heartland Payment Systems discovered thieves had been stealing financial data right from the check-out card payment machines at 175,000 of their merchants, and several years later Michael’s was hit in a similar manner.
Of course, using a credit card comes with its own risks, such as interest rates and late fees. You can run up too much debt if you’re not careful. But for those of you who are financially responsible, credit cards can also earn you miles or other bonus points and rewards.