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Why You Should Never use a Debit Card

cincinnatitom | Jun 6, 2011 |

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Debit cards create a dangerous direct linkage to your checking account, and should be avoided if possible. A credit card affords much greater fraud protection and has many other superior features, especially if you pay off the balance in full each money.

Debit cards are more subject to fraud. If you find a fraudulent charge on your credit card, you just notify them and that is taken off your bill. No money ever leaves your hands. If there is a fraudulent debit card charge, you are out the money until your bank refunds you.

Debit cards are ATM cards, too. When you use your debit card, sometimes you have to enter your pin number as well – the same pin that you use for ATM transactions. If your debit card is stolen, and the thief knows your pin, they can go to an ATM and empty your account. They may even be able to steal more money than is in your account since many banks allow overdrafts.

Debit cards expose you to large overdraft fees. Since money comes directly out of your checking account, you have to carefully monitor your balance to make sure you have enough cash available in your account. Sometimes it takes a while for deposited funds to actually become available for you to spend, so you can accidentally overdraft when you think you would have money in your account.

In addition, debit cards sometimes place a temporary hold on your checking account for an amount greater than your actual purchase. If the holds take up too much of your balance, you can overdraft even when you have enough money in the account to cover what you actually spent.

Debit cards do not have the same level of consumer protections as credit cards. Credit cards give you the power. The merchant has to receive their money from the credit card company. You normally have 60 days to dispute the charge, and the credit card company will issue a charge-back, taking back the money from the vendor, until the vendor shows that you really owe them the money. In the case of fraud or inaccurate charges, no money leaves your hands. If you use a debit card, the money leaves your account for the vendor’s account immediately, and now you have to get that money back. Hopefully the bank will help you, but you will be out the money in the meantime.

Debit cards generally do not earn rewards. Some may be starting to do rewards now, but they are usually not as good as what you could get from a good credit card.

The superior safety, consumer protections, and rewards of using credit cards leave virtually no reason to ever use or carry a debit card. It’s simply too risky to carry a direct linkage to your checking account in your wallet.