Credit or debit? Choosing the right option at the right time can help protect from unwanted charges and skimming scams.
When charged, debit cards automatically withdraw money directly from checking accounts; whereas credit cards extract funds from credit accounts. Most credit issuers carry zero liability policies so card users can dispute unauthorized charges from fraud and undelivered products or services. Debit cards typically carry limited liability policies that require cardholders to cover a percentage of the lost funds.
"Debit cards can come in handy for many purchases," stated Robert W.G. Andrew, CEO of Better Business Bureau serving Alaska, Oregon and Western Washington. "But frankly, it's more difficult to recoup stolen funds from debit cards."
Due to built-in protections, BBB urges cardholders to choose credit over debit for certain purchases. BBB points out five dangerous transactions for debit cards:
Online Shopping: Websites, e-retailers and other online service providers may be trustworthy and well-intentioned, but there are other potential risks, such as: shared wireless networks, unsecure Internet connections, data breaches, company impostors, hackers and other online schemers. There is significant anonymity on the Web so shop safely; review companies carefully, read privacy policies and make sure sites are secure before releasing payment information.
ATM Cash: Skimmers tamper with automatic teller machines and card terminals by inserting skimming devices on card readers and installing miniature spy cameras. Only use monitored ATMs in well-lit areas near trusted banks and busy shopping centers. Avoid using machines with askew card slots and keypads.
Gas: Card skimmers also meddle with unattended pay-at-the-pump gas station terminals; low-traffic highway rest stops can be particularly vulnerable.
Dining and Drinking: Restaurants, food delivery services and bars sometimes keep customer payment information on file, hold cards for tabs or process payments behind closed doors. Once cards are out of sight, they are at risk of falling into the wrong hands; cards can get overcharged or copied and used without permission.
Down Payments and Deposits: Companies that sell expensive merchandise may offer layaway programs or allow consumers to reserve goods with deposits. It is best to charge pre-payments and pricey purchases on credit cards, in case businesses close unexpectedly or orders are not fulfilled.
Regardless of payment method, check retailers on bbb.org before buying.