subject: Credit Cards Verses Debit Cards [print this page] If you are using your debit card in place of credit cards to help keep your debt under control, you will need to be aware of the differences between them. They may look the same but their functionality and security behind them differ.
What are the main differences?
A credit card is a source of funds issued by a financial institution. The funds become borrowed at the point of sale and the balance amount will be charged interest until it is paid off. Borrowing limits are pre-set by the financial company which uses the borrower's credit rating to determine limit. Credit cards are meant to be used for short-term borrowing, but with the finances of today, many people are caught in long term payoffs with large balances.
A debit card is also a card that is issued by a financial institution. The card is an electronic card attached the client's bank account and at the time of purchase, the amount of sale will be immediately deducted directly from the account. There is no billing nor any interest paid. It is not borrowing the bank's funds; it is electronically debiting the client's funds. If the client is not aware of their accounts' balance, the client runs a risk of being hit with overdraft bank fees.
How is the safety different?
A credit card is backed by the Fair Credit Billing Act. This gives you the right to dispute fraudulent charges and you will be protected:
*Protects you against unauthorized charges over $50.
*Lets you dispute charges that list the wrong date or amount.
*Protects you from charges for goods or services that were not delivered as agreed or you did not receive.
*Protects you from math errors.
*Will assist with problems of merchants failing to post payments and credits such as a return.
*If you sent the creditor a change of address in writing at least 20 days prior to end of billing cycle, you will be protected.
*Protects you against charges that you requested and explanation or written proof of a claimed error or request for clarification.
A debit card is backed by the Electronic Fund Transfer Act. The protection against unauthorized charges:
*If you report the learning of the loss or theft within two days, the client will be protected up to the lesser of $50 or the amount of unauthorized transfers.
*If you wait longer, the liability could rise to up to $500.
*If you wait longer than 60 days, the liability will not be greater than the sum of the unauthorized transfers.
When you are using a debit card, you will want to take greater precautions to protect the card, number, safety code on back and your PIN. Don't ever write your PIN on your card. You will want to memorize it. If someone you do not know contacts you over the phone or internet asking for the debit card information, do not give it out. Make sure if you are giving out your debit card numbers it is to someone you have contacted or someone you know. Deceptive phone calls or emails presenting themselves to be form your bank asking for verification should not be replied to. Call your bank or go into the facility and talk to someone you are familiar with.
You should be careful with your credit cards as well, but the idea that a debit card drains funds from your bank account immediately should make you more cautious.If you are using your debit card in place of credit cards to help keep your debt under control, you will need to be aware of the differences between them. They may look the same but their functionality and security behind them differ.
What are the main differences?
A credit card is a source of funds issued by a financial institution. The funds become borrowed at the point of sale and the balance amount will be charged interest until it is paid off. Borrowing limits are pre-set by the financial company which uses the borrower's credit rating to determine limit. Credit cards are meant to be used for short-term borrowing, but with the finances of today, many people are caught in long term payoffs with large balances.
A debit card is also a card that is issued by a financial institution. The card is an electronic card attached the client's bank account and at the time of purchase, the amount of sale will be immediately deducted directly from the account. There is no billing nor any interest paid. It is not borrowing the bank's funds; it is electronically debiting the client's funds. If the client is not aware of their accounts' balance, the client runs a risk of being hit with overdraft bank fees.
How is the safety different?
A credit card is backed by the Fair Credit Billing Act. This gives you the right to dispute fraudulent charges and you will be protected:
*Protects you against unauthorized charges over $50.
*Lets you dispute charges that list the wrong date or amount.
*Protects you from charges for goods or services that were not delivered as agreed or you did not receive.
*Protects you from math errors.
*Will assist with problems of merchants failing to post payments and credits such as a return.
*If you sent the creditor a change of address in writing at least 20 days prior to end of billing cycle, you will be protected.
*Protects you against charges that you requested and explanation or written proof of a claimed error or request for clarification.
A debit card is backed by the Electronic Fund Transfer Act. The protection against unauthorized charges:
*If you report the learning of the loss or theft within two days, the client will be protected up to the lesser of $50 or the amount of unauthorized transfers.
*If you wait longer, the liability could rise to up to $500.
*If you wait longer than 60 days, the liability will not be greater than the sum of the unauthorized transfers.
When you are using a debit card, you will want to take greater precautions to protect the card, number, safety code on back and your PIN. Don't ever write your PIN on your card. You will want to memorize it. If someone you do not know contacts you over the phone or internet asking for the debit card information, do not give it out. Make sure if you are giving out your debit card numbers it is to someone you have contacted or someone you know. Deceptive phone calls or emails presenting themselves to be form your bank asking for verification should not be replied to. Call your bank or go into the facility and talk to someone you are familiar with.
You should be careful with your credit cards as well, but the idea that a debit card drains funds from your bank account immediately should make you more cautious.
