Debit cards have eliminated the need for a person to write a check to withdraw cash, or carry cash while shopping. In the old days, they carried the bank logo on them, your account number and your name. But today they resemble the credit cards. They carry credit card logos, and can be used anywhere to buy goods including on the internet.
A debit card lets you use your own money to buy goods. The money used in conjunction with that card is your money. On the other hand, when using a credit card you’re using borrowed money that you agree to repay later on. This money is borrowed from the credit card issuer, which is normally a banking institution. Both cards resemble and function similarly, but there are some subtle differences in case of consumer protection. If someone steals your credit card you are held liable to the initial $50 of theft unless you report the loss before it is used by the thief. Then you are not liable for any fraudulent charges.
MasterCard and Visa provide zero liability protection where you don’t pay any charges if someone makes fraudulent purchases on your credit card. The similar fraud protection is applicable for a debit card, with some exceptions. Your liability is still $50, provided you inform your financial institution within 2 business days of losing your card. Failure to report a lost or stolen card, can increase your liability to $500. Also check your bank statement frequently. Don’t just glance over it, but go through it carefully. If you notice any fraudulent charges on it and don’t report it within 60 days, you are held completely liable.
In many instances, you can avail of extra protection against unauthorized use of your cards through homeowners or renters insurance. You can find out more about this by going through your policy or contacting your agent.
By now you must be wondering which cards you should use when. Most experts recommend you should use your debit card wherever you use cash e.g. groceries. An important thing to remember while using your debit card is that you must have adequate funds in your account to pay for your purchases.
For online transactions, a credit card is the best bet. This is because it is easier to dispute unauthorized purchases made on a credit card. Besides, if your purchase arrives damaged the credit card company will not levy any charges till the matter is sorted.
Remember, both cards are essential but you need to know when to use the correct one. Every card has an important use. The faster you learn how to use both cards your life will be simpler.