Credit cards and debit cards are so similar that people often feel they are interchangeable. They look the same, swipe the same, and work in almost all the same places. But there is one huge difference between debit cards and credit cards: debit cards directly access your money. Credit cards are loans – they can only access your bank’s money.
Debit Cards vs Credit Cards
Under most situations, this difference doesn’t matter much – especially if you pay your credit card bill in full every month. But if someone manages to steal your card information, it makes all the difference in the world. If there are fraudulent charges on your credit card, you have 30-45 days to review and dispute them. In most cases, credit card companies won’t make you pay until the dispute has been settled.
However, if someone uses your debit card, they’ve actually removed funds from your bank account. That money is gone until and if you can convince your bank that you didn’t make those fraudulent purchases.
Card Skimmers
Database breaches and identity theft are all over the news. This is what most of us worry about when it comes to our credit and debit cards. But thanks to ever-cheaper and ever-smaller electronics, card skimming has become a serious threat. Bad guys have figured out how to insert electronic shims into card swipe terminals that read your credit card information, just like the terminal itself does. Some hackers create a mock cover on top of the card reader.
The most common places for skimmers are public terminals like ATMs and gas pumps. In most cases, the rogue skimmers store the info for later retrieval. This is usually done using short-range wireless transmission, but can also be done from anywhere on the planet using text messaging.
Protecting Against Card Skimmers
You can inspect the ATM and gas pump to look for obvious problems. Is the terminal loose? Does it look wrong or different than it did before? If it looks fishy, move on. But if done well, it’s almost impossible to spot a skimmer. Chip cards are also vulnerable to skimmers, as well – so that doesn’t protect you. So what can you do?
If you can’t reliably protect your card info from being stolen, you need to protect your money instead: use a credit card instead of a debit card. Even if someone manages to steal your card information, you won’t be liable for the fraudulent charges. This does require that you catch the bad charges, of course. Credit card companies have actually gotten very good at automatically flagging bad charges. It’s likely that they will spot the fraud before you do. But you should be reviewing your credit card bills before you pay them each month, as well.
If your credit is such that you can’t get a regular credit card, you should consider getting a secured credit card. It will allow you to build your credit back up and give you most of the benefits of a regular credit card.
(You should also seriously consider freezing your credit – see this article for info on how and why to do that.)
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