Debit Card VS Credit Card: Which one is Safer?
At the Christmas day this year, a big fraud was done by the hackers of the country when they hacked the accounts of shoppers on Christmas at target stores. As many as 40 million shoppers were affected by this rampage. After these personal details were stolen by the hackers, people started getting frowned even by the idea of possessing a credit/debit card.
It is very important to know how safe we are using such cards and which ones we should prefer. Most of the people are not even aware of the complexity resided in owning such cards and just go in the flow of having one. It results in frauds and much more than can be done to the user on basis of having his personal info.
After this heist took place in the country, many questions are being raised as to how it could happen. Another question that pops up in the mind of the consumer is about it taken so long time for the people to discover they had been robbed and their personal bank details had been stolen. The report of illicit sales is also making news in the media.
It is good that the situation was under control soon and it did not result in a big fraud. However, this incident will trigger the customers to think about owning a debit/credit card again and evaluate which one is better for them. It has given the customers a good reality check and they are more aware and alert this time around. People have now started speculating the benefits as well as shortcomings of owning cards. Let us discuss the pros and cons of Debit Cards and Credit cards one by one.
Debit cards had been introduced to the world in the year 1966. They were introduced by the Kansas City Federal Reserve bank in order to minimize the operation costs of the bank. It would be easier and with minimized costs for the bank. While the customers keyed or swiped their account, it became a hassle-free process for the banks to monitor their money transactions. Check monitoring has remained to be a lot more harder process and therefore debit cards were seen as a device that would make it easier for the banks to monitor transactions of the users.
With it was launched an Act known as “The Electronic Fund Transfer Act” that allows the bank to issue debit cards to its users. The main purpose for the debit card was to protect the customers from any sort of fraud. However, every security in the world has loopholes. The debit cards are actually linked to the checking accounts of the users. There are some hidden charges that can surprise you at times like the fraudulent charges.
Whenever a check is bounced, there is a charge that is deducted from the account. When your checks are bounced and you report it to the authorities, they take entire 30 day cycle in consideration to accomplish the process of investigation. In these cases, you can lose out on a substantial amount of time and can lose out on the opportunities to pay your bills and the bank does not stay liable for paying the late fees.
There is more to the miseries of the user while using a debit card. When you utilize a debit card in order to affect the purchase, the money from your account is debited right at the moment. It does not matter if the items turn out to be defective or they never even arrive for delivery but the charges are already cut. In such cases, you are not supposed to ask the bank to fight with the merchandise store because they are not liable to, thanks to the relaxed rules of EFTA act. In the end, you will be the one making a compromise with money and letting it go because there is nothing you can actually do about it.
On the other hand, when it comes to credit cards, such problems are nowhere near the user. It is governed with Fair Credit Billing Act which has less relaxed rules when it comes to purchasing with the use of a card. Apart from that, a credit card never latches the amount from your bank account until you have authorized the payment and shown it a green flag. It also asks the companies to reimburse the amount until any of the disputes has been settled between the two parties.
The problem persists when the user buys gas or books a hotel room. In such cases when the user pays the amount with card, the merchant asks to the bank in order to make sure if there is enough funds on the card. It is also accompanied with any margin for errors. There are times when the gas machine sets the limit to be 100 USD, since it does not know if you are filling gas into the motorcycle or a car.
The problem arrives when your account balance is very low and most college students fall to that situation for not having great funds in their cards. There are an ample of things to be concerned about when you are using a credit and debit card.
Let us now discuss the pros and cons of a credit card and know how you can be wary of the fraud or cheat that can happen to you:
The problem with a credit card often appears when you transfer funds from your card to another and it could present you with huge amount of fees. Sometimes when you are late enough to deposit your monthly payments, it also charges you with heavy charges. There are times when the customer falls prey to the luring heavy credit limits on their card but the charges for any deed is proportional to the credit limit that they are offered in the card.
It is actually better to limit the credit card limits and especially in the cases when we cannot afford the miscellaneous charges associated with the card. When we possess a credit card, it becomes far easier for us to shop or buy items. It is only at the end of the month end that we realize that it is impossible to pay back such expenses. This is the reason why you should set realistic limits to the card.
There are some positives to credit card too. If you are entangled in some fraud through your card, the FCBA act will protect your rights in the correct manner. It is not the case with debit cards and this is why credit cards score better when it comes to security of the money.
In all cases, both credit and debit cards can present you with problems but in case of security, credit cards sit a little higher to the debit cards.