Debit Card Dangers and Why your Should NOT Use Yours

Many people assume that because the card is issued by their banking institution, their debit card must be completely safe. Although a debit card seems the same as any credit card and is advertised by all the banks as “easy”, “secure” and “simple to use”, this is far from the case. There are underlying similarties and of course, in appearance, they seem exactly the same.

Similarities are not all that you need for the credit protection and security that you are guaranteed through any major credit card. The main difference between these two types of cards had some serious disadvantages for the user. While credit cards are a financial tool wherein the consumer makes a purchase and borrows money directly from the credit issuer.Debit cards present a whole new financial picture.

When using a credit card, the consumer is aware that each time they are charging anything, he or she is incurring debt along with that purchase. The borrower has the option of whether to pay off the balance in full right away or pay it off over a period of time and pay the additional interest. This is a simple way of borrowing with set rules, simple to follow terms and the consumer is always aware of any fees or interest rates.

Debit cards, on the other hand, work in a completely different way. These debit cards are also a financial tool wherein the consumer makes purchases using the money they currently hold in their linked bank account that already has funds available. This presents a number of disadvantages for anyone aware of the underlying problems that these newly created debit cards hold. The first and foremost problem that can be seen easily with the use of debit cards is that they offer virtually no protection againest fradulent use.

While they may offer more protection than they did in the past, the amount of protection and types of protection can vary depending on the banking institution and their regulations. This is especially true if a debit card has been stolen and is not reported in a timely manner. Most banking institutions will only cover a very small amount of what is fradulently charged when a debit card is stolen and used. While with your average credit card, you are fully protected for the full amount of the fradulent charges.

This puts you, the consumer, in a much weaker position when using your debit card instead of your credit card. When a theif makes a fradulent charge on your debit card, the merchant who sold the item already has the money in their account transferred as soon as the transaction takes place. With a credit card this is not the case and the merchant has to wait for the credit issuer to make the payment to them. That means for the consumer, that if a dispute has to be filed because of a fradulent charge, that while the dispute is in process, your money remains with the merchant and not back in your bank account.

What this means for the consumer is that bills might bounce, payments might not be paid on time and your account has less money than you figured until the dispute is settled. How many of us, in this day and age and with the economy in the state that it is in, can afford to have our money on hold? With a credit card however, as soon as you file the dispute, the charges are removed from your account, you are portected as the consumer and the immediate fault is found in the fradulent charge instead of in your bank account.

While using money from your own bank account does not seem like a problem, it can have a huge impact when fraud or any type of disputes arise. Even though the fraudulent charge may be decided in your favor in the end, it takes some time to resolve the problem and who wants the worry of having your money in limbo in the meantime? Even though the debit cards are starting to offer more rewards and trying to keep consumers charging away, luckily consumers are wising up and stopping the madness.

These debit cards, no matter how attractive they seem because of the marketing hype, still have far less valuable rewards and benefits than credit cards can offer.

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Author: Amy Pedersen, is penned as Your Credit Score Secrets featured Credit Insider whose articles provide insider tips and insightful knowledge of the credit industry. Her article topics range from the nature of credit reports to the underlying problems facing credit scoring and the laws which support credit report repair done by the average person.