Credit Cards vs. Debit Cards: Which is Safer for Online Shopping?

Online shopping offers convenience and great deals, but it also leaves you vulnerable to hackers and data breaches. Criminals are constantly trying to break into the databases of online retailers to access consumers’ personal information and debit or credit card numbers.

You should take steps to protect yourself online, and that includes determining the best way to pay for online purchases. If your preferred methods of payment are debit or credit cards, you need to know which is safer.

Simply put, credit cards offer better protection for online shopping in a few important areas.

Vulnerability

If your card information is stolen online, ask yourself which is more vulnerable – your credit card, or your debit card?

Your debit card is linked to your bank account, which contains real money. If a thief gets ahold of your PIN, they can use it to empty the cash from your bank account. Even if they only use your card to make charges, those charges could quickly empty and even overdraft your account.

Credit cards, on the other hand, don’t touch your real funds, and fraudulent charges won’t affect your actual finances in the same way.

Liability

Consumers are protected from liability for fraudulent charges by federal legislation – the Fair Credit Billing Act (FCBA) for credit cards and the Electronic Fund Transfer Act (EFTA) for debit. But these laws don’t protect credit cards and debit cards equally.

Under the EFTA, you are not responsible for any fraudulent charges if you report your physical ATM or debit card stolen before it is used. That remains true if your debit card number, but not your physical card, is stolen, as long as you report fraudulent transactions within 60 days of receiving your statement. If you do fail to identify and report a fraudulent charge in that 60-day time frame, you could be fully liable.

Under the FCBA, you can never be held liable for more than $50 in unauthorized charges on your credit card, no matter what. That liability drops to $0 if you report your card stolen before the charges occur or if it’s your card number, not your physical card, that was stolen. In any event, many credit card issuers will waive the $50 liability anyway.

Recovery

Recovering from fraudulent charges is also more complicated with debit cards.

With debit cards, you may have to wait as your bank investigates and refunds fraudulent charges on your account. In the meantime, your ability to pay your bills, make purchases, and keep money in your account may be affected. That’s because your actual money was used to make purchases.

With credit cards, you can simply report fraudulent charges to your credit card issuer and wait for a statement credit, with no adverse effect to your finances.

The Bottom Line

While both payment types have some legal protections, credit cards offer a few distinct advantages. They aren’t tied to your real bank account and their legal protections are more robust. If you want to guard against theft, you should consider using your credit card for future online purchases, and scrubbing your debit card number from existing accounts.