The common opinion about credit cards is that they are safer than a debit card. But a debit card is just as safe when used in the credit function (not using the PIN number), as stated on Visa’s own website: http://usa.visa.com/personal/using_visa/personal_finance/debit.html
* Convenience – The Visa Debit card frees cardholders from having to carry bulky checkbooks, multiple identification cards and large amounts of cash.
* Security – Visa offers debit cardholders Zero Liability in cases of card fraud, theft or unauthorized card purchases for signature-based transactions, provided cardholders promptly notify their issuer of such fraud, theft, or unauthorized purchase.
I have been living without a credit card for a number of years. There are so many other benefits that Visa does not post on their site about debit cards:
- The lowest interest rate in town! The interest rate on my debit card is the lowest you can get – ZERO PERCENT!
- I spend less: Dunn and Bradstreet did a study reporting that on average you will spend 12-18% more when making a purchase with a credit card as opposed to cash. While a debit card is still a swipe instead of spending cash I find that I make different, smarter choices when making purchases.
- No annual fee or account fees.
- No “gotcha fees”. There are no late payment fees, over the limit fees (although there would be an overdraft on a debit card, see next point).
- No pay-off or pre-pay fees for paying the balance in full (keep an eye out for many credit card companies to charge a fee for this soon).
- More attention to spending: I’m spending my own money and I can’t spend what I don’t have in the account. This creates a healthy habit of paying attention to my accounts, upcoming expenses, and my credit bureau – which I should be doing ANYWAY.
- No difference with retailers: If you run your debit card through the machine like a credit card then the transaction is handled exactly like a credit card – same processes and protections apply.
If my debit card is stolen:
…then I would have to change my account, but my bank will handle that for me. Otherwise they will not get my business and I will find one that does – and right now BANKS REALLY WANT MY BUSINESS. Credit card companies want my business, but only to the extent that I pay them interest or fees.
So which is safer? Given the benefits of paying attention to my spending and financial accounts, I vote for the debit card over the possibility of over-charging, over-spending, and miss-management of the Credit Card.