Credit cards vs Debt cards

[Borderland]

Recently it seems that I've had to replace debt cards every 6 months or so due to fraud and online use. I'll admit it's convenient but damn the hassle is becoming bothersome. We have debit cards but no credit cards. I understand the difference in that the credit card payment comes due every month and there's a heavy price to pay (interest) if you don't pay the amount due in full. That wouldn't be the case for us as we have no debt other than the day to day stuff like food, utilities and fuel. In other words we don't play the credit/loan game.

I just got off the phone with the bank to dispute two charges in the last few days. About all they would say is we have to investigate this. OK, investigate it, but if I end up paying it the debit card gets cut up.

Anyway, my question to those that only use a credit card, Is this more secure than a debit card. Do credit cards make it easier to track down a charge. I see all manor of coding on debit transactions, including bogus phone numbers, and I can't figure out where some of those charges came from. My wife also uses that card and can't remember if she charged a certain item or not, so it's up to me to figure out if it's legit.

My neighbor, who was in business for a long time and worth a few million, says to ditch the debit cards.

[FrankB]

My wife travelled to Miami this past January, and some creature put a few hundred dollars of men’s cologne on her debit card. The bank provided the recipient’s address, and it was a shipping company in Miami. I called the police down there, and the Sgt I spoke with said they have thousands of addresses at that building. My bank only made me sign a statement that we didn’t make the purchases, and immediately refunded the money.

I’ve since read that a credit card company is better at protecting the card holder than a bank, but that apparently depends on the bank.

[Robinson]

I use a credit card over a debit card, even though my debit card can double as a credit card.

My bank does a great job of helping solve issues with questionable/fraudulent charges, but even still I have had a new credit card issued to me at least once due to fraudulent charges. But I'd say credit cards are less vulnerable than debit cards.

The way we use a credit card is to buy everything with it, accumulate bunches of redeemable points, and pay it off each month to avoid interest.

[BillSWPA]

Recently it seems that I've had to replace debt cards every 6 months or so due to fraud and online use. I'll admit it's convenient but damn the hassle is becoming bothersome. We have debit cards but no credit cards. I understand the difference in that the credit card payment comes due every month and there's a heavy price to pay (interest) if you don't pay the amount due in full. That wouldn't be the case for us as we have no debt other than the day to day stuff like food, utilities and fuel. In other words we don't play the credit/loan game.

I just got off the phone with the bank to dispute two charges in the last few days. About all they would say is we have to investigate this. OK, investigate it, but if I end up paying it the debit card gets cut up.

Anyway, my question to those that only use a credit card, Is this more secure than a debit card. Do credit cards make it easier to track down a charge. I see all manor of coding on debit transactions, including bogus phone numbers, and I can't figure out where some of those charges came from. My wife also uses that card and can't remember if she charged a certain item or not, so it's up to me to figure out if it's legit.

My neighbor, who was in business for a long time and worth a few million, says to ditch the debit cards.

It is not so much credit card v. debit card as which bank is doing the investigating when a charge is disputed.

I am not a fan of everything Discover does, but when I have disputed a charge, I have ended up not having to pay that charge every time.

When I disputed a charge with my bank's debit card, the dispute was declined for a reason that had nothing to do with the reason for the dispute (the party receiving the payment ultimately refunded it on their own).

One difference is of course that when a debit card is charged, the money has now left your bank. With a credit card, the money does not leave your bank until you pay the bill.

Overall I have found using debit cards as much as possible keeps my stress level at a minimum. I am never wondering what the monthly payment will be to get it paid off in full.

[MTP]

I use credit cards only for this exact reason, the ease of contesting fraudolent transactions. I never paid interest on a CC balance since I repay it in full monthly right after the statement is issued.

The cashback is nice. And you are technically not liable for any fraudolent charges with the caveat that you have to report it "promptly". See the Fair Credit Billing Act for more info.

So far I had fraud happen approx. once a year, and the process of replacing the CC and contesting the charge has been flawless, with multiple providers. I'm also very cautious with use of the card online, and use throwaway card numbers setup with Revolut whenever I have to give out my CC number to someone I dont think is reputable or will potentially mishandle my CC info. If I were less cautious I would probably have to contest charges more often than once a year.

Back in the day when I was residing in Europe we only used Debit Cards but Europe has a much better online secure payment infrastructure compared to the US. Payments are authenticated using 3D Secure for "card not present transactions" and effectively you need multi factor authentication (like an sms code for example) as part of every online payment.

Credid/Debit card information can also be sniffed when paying in person, but you are reasonably safe if you do the payment yourself (instead of giving the phisical card to someone) and you remember to insert the card in the reader slot instead of swiping. Swiping is fairly old school and is quite .. unsafe. So is a waiter making a photo of your card in the back room. Use judgement and pay cash where appropriate.

Bottom line:
NO WAY I would ever use a debit card for online transactions on this side of the ocean.
Credit Card for trusted online vendors, or any vendor really as long as they use PayPal or similar trusted payment processor.
Never hand your phisical card to someone who is going to leave the room with it. Avoid old-school swiping whenever possible. Pay cash.
Revolut single-use card numbers, connected to an account with minimal balance, for unknown mom and pop online stores etc.

[vcdgrips]

For all of the reasons mentioned, a CC is the way to go re online sales, airline tickets, car rentals etc. If you report the fraud, your liability is statutorily capped at 50,00 IIRC.

While most banks "do the right thing" with debit cards in the end, it can take weeks for it to happen and you are out the money in the interim.


YMMV/FWIW

Get 1 CC that earns points for something you care about and will use, travel miles, amazon dollars etc. and run everything thru it, paying as you go on a near daily basis.

Get a second one that is truly for emergency use.

That is likely the only 2 CC's you would ever need.

[Borderland]

It is not so much credit card v. debit card as which bank is doing the investigating when a charge is disputed.

I am not a fan of everything Discover does, but when I have disputed a charge, I have ended up not having to pay that charge every time.

When I disputed a charge with my bank's debit card, the dispute was declined for a reason that had nothing to do with the reason for the dispute (the party receiving the payment ultimately refunded it on their own).

One difference is of course that when a debit card is charged, the money has now left your bank. With a credit card, the money does not leave your bank until you pay the bill.

Overall I have found using debit cards as much as possible keeps my stress level at a minimum. I am never wondering what the monthly payment will be to get it paid off in full.

Good point. I think if we use a credit card there won't be any surprises unless it's fraud. I usually keep a substantial amount of money in my bank account. My broker says I need to not do that. But I know why.

[TGS]

The credit vs debit thing has been covered fairly well, but I want to mention this tangential piece since it is a huge issue right now:

Passport card fraud rings. They usually grab a vagrant, give them a nominal amount of cash as payment for participation, make them a fake ID in the form of a passport card, and have them go into local bank branches and pull all your money out of your account. It has spread into other areas of financial fraud, as well. Most banks do not properly train their employees to identify fraudulent passport cards, and they're usually very, very bad fakes.

So, if you can, require a second form of ID or some sort of multi-factor authentication for in-person withdrawals. If your bank doesn't offer that, leave the bank for one that does or switch to online only banking unless you like waking up to your entire savings account being emptied.

Your broker is not trying to fleece you by telling you it's unwise to keep a significant amount of money in a single bank account. He probably has a clue what he's talking about.

[RoyGBiv]

Anyway, my question to those that only use a credit card, Is this more secure than a debit card. Do credit cards make it easier to track down a charge. I see all manor of coding on debit transactions, including bogus phone numbers, and I can't figure out where some of those charges came from. My wife also uses that card and can't remember if she charged a certain item or not, so it's up to me to figure out if it's legit.

My neighbor, who was in business for a long time and worth a few million, says to ditch the debit cards.

Never use a debit card. Never.
1. Fraud charges come out of your bank account directly. Sure, you'll likely get them back, but, if someone manages to fraud your card for $5K, how long can you be out that and not have it cause pain.?
2. Assuming you pay your CREDIT card bill in full each month, why not get, essentially, a short term loan for free? Items I buy today I'll pay for 2-3 weeks after the current billing cycle closes... that could be 5-6 weeks from now or longer.
3. I believe the same transaction info is collected for debit and credit transactions...

If you have a semi-regular fraud problem with debit cards, you need to look at where that might be happening. Our daughter regularly got her card frauded buying gas at a particular station... stop shopping there.

Some credit cards (Amex for sure) will give you separate card numbers that roll up to the same main account. I recommend getting an extra card and only using that number for paying legit bills... Mobile phone bill, for example. Never use the extra card outside the house. If one of the OTHER cards gets frauded, you're not stuck updating a bunch of bill pay accounts. Some cards will let you generate a ghost number (not on any issued card) for that purpose...

[luckyman]

My experience has been Amex has been totally awesome with fraud detection and fraud response. Of course it isn’t as widely accepted as Visa. Visa/Mastercard credit cards seem dependent on the issuer, but are in any case better than debit cards. I have one Visa that is only used for recurring online payments, and another that I use for everything else that does not take Amex.