Q: On your stuff you wrote about debit cards, I’m a senior citizen and I’ve had a debit card forever. I’ve never had any problem, mainly because I check on my accounts at least three or four days a week and I would do the same thing if I used a regular credit card, which I do.
What I want to say is this: Why are you trying to get people to drop debit cards and go for the other cards? With a credit card, you run up and spend all of this money. Or you don’t pay it off on time so you can get in a lot of trouble there, too.
So I really think you should leave the debit card stuff alone because debit cards to me as a senior, I think it’s a wonderful thing to have. I use it quite often, more than I do with my credit card. And I have no problem. And if something happens, which something did happen last year, the bank corrected it immediately. So I have no fault with the bank. No fault with the debit card. What I think you’re doing is selling people on dropping debit cards and going for credit cards. And I think that’s wrong.
M.M. Cleveland Heights
A: I respect your passion about this topic. But first, this is about personal finance. Like I always say, it’s called personal finance because it’s personal. What works for you may not work for someone else.
You are sadly mistaken on a couple of points. You say you’ve never had a problem with a debit card because you check on your accounts three or four days a week. Checking frequently on your bank account that’s linked to your debit card is certainly a great idea. But it doesn’t prevent fraud or billing problems. It only catches the problem so it can be stopped and hopefully resolved quickly.
I don’t recommend that people have debit cards connected to their primary bank account — the account where they get their direct deposits and from which they pay the majority of their bills. That’s when people have the biggest woes.
You say you’ve never had a problem. I say it works until it doesn’t. About one in 14 consumers has been hit by debit card fraud in the past five years. Maybe it’s minor fraud that can be resolved quickly. Or maybe it’s fraud that drains your entire bank account of tens of thousands of dollars and it takes weeks or months to get your money back.
If you’re carrying a debit card connected to your primary checking account, you’re pretty much carrying around access to your money for anyone who steals your card, skims the numbers or buys your information after a data breach at a store or restaurant.
Clearly, everything is about a trade-off. Some people may choose not to use a credit card for whatever reason and use a debit card instead. Credit cards certainly carry the risk of running up debt. For people who use debit cards, they’d be wise to link it to a secondary checking account that doesn’t contain a lot of money and that they can get by without for a while if there’s a problem.
You might think it’s all just plastic. But here are some other reasons people should educate themselves about the differences between debit cards and credit cards before they make decisions.
- Consumers have far less legal and recognized protection with a debit card than with a credit card. Debit runs no legally guaranteed “zero liability” protection against fraud or unauthorized use. Credit cards do.
- You have 60 days to dispute charges on your credit card bill. With debit cards, you have two days.
- Credit cards offer protection under the federal Fair Credit Billing Act. This means you can refuse to pay for products or services that you didn't get or that are defective. There's no such protection with a debit card.
- With debit card mistakes, you’re fighting to get your own money back into your checking account. Your bank could offer an immediate provisional credit. But banks often wait seven to 10 days while they investigate. With credit card mistakes, you’re fighting to get charges removed that you haven’t paid yet.
- With credit cards, you can dispute fraudulent charges and erroneous charges. With debit cards, banks generally regard errors by a merchant as a "billing dispute," not fraud. You're on your own to get it resolved.
- It often takes banks longer to detect debit card fraud because they have your transaction history only with that bank. Credit card fraud is often detected more quickly. Credit card networks have more thorough histories on individuals because they cross-check your buying patterns against the entire MasterCard and Visa system.
Banks desperately want you to believe that debit cards are safe. However, that "zero liability" promise is voluntary, not the law. If you don't believe me, ask your banker to show you the part of the law that says debit cards and credit cards have equal protections. They can’t do it, because it doesn’t exist.
People use debit cards even after hearing such warnings because they say, oh, “I’ve never had a problem.” Yeah, you don’t have a problem until you do. My email inbox and voicemail are are filled with cases of people pleading for help because their primary checking account has been cleaned out because of a problem with their debit card.
If you do use a debit card, I strongly urge you to enroll in text or email alerts so you’re alerted in real time, or at least the same day, if there are transactions above thresholds you choose.
Because of the volume of requests, Teresa cannot help everyone who contacts her. To reach her: moneymatters@plaind.com On Facebook: MurrayMoneyMatters On Twitter: @teresamurray Previous columns online: cleveland.com/moneymatters
Teresa MurrayReporter/ Personal & Consumer FinanceThe Plain Dealer216-316-7064
Follow me on Twitter: @teresamurrayOn Facebook: MurrayMoneyMatters
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