Should You Use a Credit Card or a Debit Card For Your Holiday Purchases?

As you prepare to start (or finish, depending on how on top of it you are this year) your holiday shopping, there’s one simple step you can take that will keep you safer. Yes, it really does make a difference which card you pull out of your wallet when it comes time to check out.

In this blog post, I will discuss whether you should use credit cards or debit cards for your online shopping purchases. It might be a question that’s been on your mind, along with other security-oriented considerations. This year consumers are especially nervous in the wake of the Equifax data breach, at least according to a consumer survey conducted by Generali Global Assistance in October, which revealed that 75 percent of American shoppers are concerned about having their identity stolen during this holiday season.

But back to the question at hand: credit or debit?

According to the experts, credit is the way to go.

The reason for this is simple. The same liability protections that cover credit card fraud do not always apply to debit cards. Federal law limits consumer liability for credit card fraud to $50, but that’s only if your physical card is stolen and used by a thief before you can report it stolen.

If only your card number is stolen as a result of a breach or hack, you’re not on the hook for any fraudulent charges.

You can — and should — check with your credit card issuer to be sure they offer zero fraud liability, but most major issuers do, including American Express, Bank of America, Capital One, Chase, Citibank, Discover, Wells Fargo and more (for a complete list, check out this post from nerdwallet). To read more about possible exceptions to the zero liability policies (there are ALWAYS exceptions), visit this article from the balance.

In contrast, your liability with a debit or ATM card that’s been stolen or compromised is much higher, especially if you don’t report it right away. It’s $50 if you report your card stolen within two business days but $500 if you report your card stolen more than two business days after learning about the theft (but within 60 days of your account statement date), according to the Federal Trade Commission. And if you wait more than 60 days after your account statement is sent to you, the damage that could be done is unlimited. The thief could literally empty your bank account and you’d possibly have no recourse.

Beyond what you’re liable for in the end, if your debit card is compromised and a thief empties your checking account, you could be without much-needed funds to pay your bills while you unravel the mess.

You’re actually without the money you use to meet your basic needs. That can be much harder for people, particularly if it takes a couple of days, or even a week, to get all of that back in line and demonstrate that you were victimized,” Eva Velasquez, CEO and president of the Identity Theft Resource Center, told WWLTV.com for this story.

A few other tips:

  • We suggest you strongly consider using just one credit card for all holiday purchases and then monitor the purchases on that card closely to make sure they’re all legitimate.
  • If you’d rather skip using your credit card because you’re afraid you’ll be tempted to rack up more debt than you can pay off right away, you could buy a prepaid Visa or Amex card and put the total amount you have budgeted for the Christmas shopping season on the card.

For more tips on how to stay safe while shopping online on Cyber Monday and anytime really, visit our recent blog post.

If you’re one of the folks who is on heightened alert following the Equifax breach, we have good news! LibertyID is the AAA of identity theft protection, offering the most effective identity theft restoration and protection service. Sign up for an annual subscription and rest easy knowing that if your identity is stolen, we will fix it. There’s no limit to the time or money we will spend restoring your identity to pre-event status. A certified restoration specialist will handle all of the legwork and keep you informed with regular status updates. But just like with AAA, you have to be covered before there’s an incident.

LibertyID — because you deserve to have someone else clean up the mess if your identity is stolen. Like us on Facebook to see more tips on how to protect your identity.

Photo Credit: happy holidays, frankieleon, Creative Commons Attribution-ShareAlike 2.0

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