Imagine your granddaughter has been begging to go to ballet lessons for over a year. She has been on the waiting list and the studio just called to tell you she has a spot, but you have to pay for the full season in advance – $2,600. You give your credit card information, hang up and immediately call your granddaughter with the good news. She is thrilled! A couple of days later, you notice the transaction was processed twice. You open the card app on your phone and open a dispute, and the second charge disappears. If you had used your debit card, it would be a completely different situation: the money would have come straight from your checking account, and it could have taken weeks to have that transaction reversed.
Credit and debit cards appear to be the same, but the security behind them differs vastly. Federal law limits your liability for unauthorized credit card charges at $50; some issuers waive that amount. However, if you report a debit card more than two days after it was stolen, you are liable for $500, or the entire balance if it has been 60 days or more.
An added bonus with credit cards is that some feature rewards. Did you know that in 2024, Americans earned $47.5 billion in credit card rewards? At an average of $228 per cardholder, that could be a nice dinner out with friends or a new pair of shoes. Debit cards do not earn rewards.
Since credit cards have stronger fraud protection (and rewards), there are five places you should always use a credit card instead of a debit card.
GAS STATIONS AND CONVENIENCE STORES
Gas stations are a favorite of criminals with skimmers, those hidden contraptions that nick your card information the second you swipe. According to FBI estimates, skimmers cost consumers and financial institutions more than $1 billion per year. If you use a credit card, fraud can be detected in real time by keeping an eye on your account. Losing your debit card info to fraud means the crooks can drain your bank account and it could take weeks to get that back.
Using a credit card with gas rewards could even earn you cash back and keep your checking account safe.
Consumers who suspect that a gas pump has been tampered with should contact the gas station manager and file a complaint with FDACS. You can file a complaint online or by calling 1-800-HELP-FLA (435-7352) or, for Spanish speakers, 1-800-FL-AYUDA (352-9832).
TRAVEL ARRANGEMENTS
Debit cards do not work well with reserving flights, hotels, or rental cars. Hotels and rental car agencies normally place holds on your debit card which can sit for several days, which can tie up your money. When you use a credit card, the hold is placed on the issuer of the card, leaving you free to continue using the card.
Credit cards have so many more advantages, the choice is easy.
- Trip protection: Many travel cards offer trip insurance, reimbursement for lost baggage and rental car coverage.
- Great rewards: Some travel cards provide even more points when you book through their website, which can save you money or save on your next trip.
- Extra incentives: Check to see if your card has more perks, like hotel upgrades, airport lounge access or TSA PreCheck credits.
To file a complaint against a seller of travel, use our online complaint form or call 1-800-HELP-FLA (435-7352).
ONLINE SHOPPING
Using your debit card while shopping online is risky. Even buying from a reputable source is perilous, as hackers are omnipresent. Then take into consideration the number of dodgy websites you see on social media. All it takes is one time for your debit card to fall into the wrong hands, and charges start appearing. By the time you notice and report the fraud, you could be out thousands of dollars, then your account is frozen for days while the investigation continues. By the way, there is no guarantee you will recoup those losses. Remember with a credit card, you’re only on the hook for $50.
BIG TICKET PURCHASES
Many credit cards carry additional safeguards for the pricier items you purchase, such as an extended warranty, damage and theft protection for your new 72” television. Debit cards offer none of these.
RESTAURANTS AND BARS
There is a new tapas place in town, and you cannot wait to try it. You and a friend head there on opening night and snag a great table. The place is bustling and the staff is a tad overwhelmed, but you are having such a good time. You hand over your debit card to pay. When your server returns, you realize it has been several minutes – plenty of time to clone or skim your card. Again, your checking account is at risk. If you had used a credit card, all you have to do is freeze the card through an app on your phone, and in seconds, your account is protected. Not to mention, there are a plethora of dining reward cards that cash back at restaurants, so being safe pays.
Adapted from: 5 Places You Should Never Use a Debit Card | The Motley Fool
