Is it safe to use your debit card?
How do you pay for your purchases? It may be instinct for you to pull out any piece of plastic without thinking, but your random card of choice might not be the safest way to pay. Is it always safe to use your debit card? Let’s explore when and how to use your debit card.
Credit and debit: How are they different?
Appearances aside, your credit and debit cards have very little in common.
Credit cards allow you to choose your purchases now and pay for them weeks, months, or even years later. A balance that grows over time includes added interest, but if you make timely payments, you’ll have a small loan that usually costs you little to nothing. Credit cards also offer rewards, purchase protection, and the ability to back out of a purchase you’ve decided not to get. You can also contest fraudulent charges on your account or freeze your credit on a compromised card.
On the other hand, debit card payments will take the money right out of your checking account as soon as you swipe. There’s no interest here, but there may be less purchase protection.
Debit cards are great for helping you stick to your budget and steer clear of debt. However, because they may offer little recourse in fraud, credit cards can be the better choice in vulnerable situations.
5 purchases to carefully consider before using your debit card
Here’s where you may not want to use your debit card:
1. At the pump
Card skimmers at gas stations are on the rise. By using your credit card instead of your debit card at the pump, you’ll have added protection against fraud. You can also use cash to avoid the risk of getting skimmed altogether. So, while using a debit card may not be unsafe, a credit card would be better for the added protection.
2. At an isolated ATM
The ATM at Elevate Credit Union is definitely safe to use. The one at the crowded pharmacy is probably OK. The machine in a secluded corner of an empty convenience store may have been tampered with.
Isolated ATMs in locations with very little security and sparse foot traffic are prime targets for hackers. It’s best to give these machines a wide berth and pick up your cash at Elevate Credit Union.
3. In an unfamiliar location
When on vacation, think before you swipe. You don’t know the area and can’t be sure which clerks are trustworthy. You’re better off paying with a credit card or cash, so your purchases are protected against fraud.
4. For large purchases
If you’re springing for a new entertainment center or another big-ticket item, you’re best off using your credit card. It’ll offer you dispute rights if the product doesn’t turn out how you expected, and you might be granted an extended warranty just for using a credit card.
5. Restaurants
Can you trust your favorite restaurant's servers with your financial information? When you hand them your debit card at the end of the meal, that’s what you’re doing. The server has enough time to clone your card and then use it for any purchases they’d like to make. Unless your restaurant has a tableside payment system, you better use a credit card or cash to pay for your meal.
Look out for skimmers.
Always use your debit or credit card with caution. First, check the payment processor for anything that looks out of place. These signs might include a newer keypad on an older machine or a hard-to-use slot for your card. Don’t forget to cover the pad with your hand when inputting your PIN.
Now you know when it is safe to use your debit card and when you should opt for another option. If you like this post, check out our MoneySmart Tips blog.