Is it Safer to Pay with a Credit or a Debit Card?

It was huge news when payment card information belonging to 40 million Target customers was stolen (to the point where their CEO recently resigned). In January, hackers were said to have gotten as many as 1.1 million debit and credit card users.

While these stories, over time, are beginning to fade into the background – at least until the next major heist, we have been asked a good question that has come out of all this. That question is: in a retail environment, is it safer to pay with a credit or a debit card? Let’s take a closer look at each to see the pros and cons of each.

Paying with a Credit Card

The Federal Credit Card Billing Act was created to protect the consumer. Under this act, if a card number is stolen and used fraudulently, the owner is not held liable for the charges. Similarly, if the card itself is stolen, the owner isn’t held liable as long as the card is reported stolen before any transactions take place; otherwise, a maximum $50 for fraudulent activity could be charged on the card.

Paying with a Debit Card

Should someone’s debit card information become compromised, the cardholder certainly has more to lose. If a card is reported lost or stolen prior to any transactions occurring, the cardholder is not responsible for any charges. If the card is reported lost or stolen within two days of any fraudulent transaction, the cardholder may be held responsible for $50 of the fraudulent activity. In the case of a debit card reporting a missing card as soon as possible is of extra importance, so that the cardholder avoids paying penalties. For example, if the card isn’t reported stolen or missing within two days of unauthorized usage, the cardholder can be responsible for up to $500 in penalties. Additionally, if it isn’t reported within the first 60 days, there is no real limit to what the cardholder could lose.

And here’s the worst part. If your debit card information falls into the wrong hands, your bank account funds are suddenly there for the taking. This becomes a major hassle for a number of reasons, which are easy to imagine. Checks you’ve already written could bounce if your account’s funds have been depleted by a hacker. Bills you need to pay will be delayed as you wait for the funds to be replenished. And it takes time and effort to fix the errors, even when you didn’t do anything wrong.