When it comes to everyday purchases, consumers have more choices than ever. Among the most common are credit and debit cards. Both are convenient, widely accepted, and eliminate the need to carry cash. But when it comes to safety, many people wonder which is the better option.

To answer this, we’ll explore how each card works, how fraud protection differs, and what you should consider when deciding which to use.

The Core Difference Between Credit and Debit

At a basic level, the main distinction between a credit card and a debit card is the source of funds.

• Credit cards let you borrow money from the issuing bank up to a preset limit. You pay it back later, either in full or over time with interest.
• Debit cards pull money directly from your bank account at the time of purchase.

This simple difference has far-reaching implications when it comes to fraud, dispute resolution, and financial protection.

Fraud Protection: Credit Has the Edge

When unauthorized charges happen, the protections offered by credit and debit cards are not equal.

Credit Cards:

Under the Fair Credit Billing Act (FCBA), your liability for unauthorized charges on a credit card is capped at $50, and many issuers waive that amount entirely. Also, since the money never leaves your bank account, you’re not out any funds while the charge is being investigated. Most credit card companies offer 24/7 fraud monitoring and will often alert you to suspicious activity before you even notice it.

Debit Cards:

With debit cards, the rules are governed by the Electronic Fund Transfer Act (EFTA). If you report a lost or stolen card before any charges occur, you’re not responsible. But if you report after fraudulent charges are made, your liability can vary:

• Report within two days: Max liability of $50
• Report within 60 days: Max liability of $500
• Report after 60 days: You could lose all the money that was stolen

Even if you’re ultimately reimbursed, the stolen money is withdrawn from your account immediately. This can cause overdrafts, bounced checks, and missed bill payments while the issue is sorted out.

Verdict: Credit cards clearly offer stronger and more convenient fraud protection.

Disputes and Chargebacks

Another area where credit cards shine is dispute resolution.

If a merchant doesn’t deliver a product, charges you incorrectly, or refuses a return, credit card users can initiate a chargeback. The issuer will temporarily reverse the charge while they investigate, which gives consumers leverage.

Debit card disputes are more difficult. While banks may still help with fraudulent or erroneous charges, they don’t offer the same protection for problems with purchases. Once the money is taken from your account, it can be harder to get back.

Skimming and Online Shopping Risks

Skimming devices, often found at gas stations or ATMs, are a common way for thieves to steal card information. If your debit card is compromised, they can drain your checking account quickly.

Credit cards offer a safety net here. Even if the card number is stolen, thieves are spending the bank’s money, not yours. You’ll have time to spot the fraud and fix it without immediate financial damage.

When it comes to online shopping, credit cards are generally safer. They offer better protection from unauthorized transactions and are easier to cancel and replace. Using a debit card online can put your checking account at risk if the website is compromised or if you fall for a phishing scam.