published Sunday, March 9th, 2014

Consumer Watch: Pros and cons of using debit vs. credit cards when shopping

by Ellen Phillips

Tax Tip

Check out Publication 17, Your Federal Income Tax, on the IRS website. It’s a complete tax resource that includes information such as whether you need to file or how to choose your filing status.

A couple of weeks ago, I received a notice from Target reminding me of my free one-year Experian offer that allows that credit reporting company to keep an eye on and report if anything funny is going on with my purchases. (The notice is, of course, thanks to Target’s recent data breaching horrors.)

The irony of the situation is I never pay with a debit card, rarely shop at Target, and only last fall did I take out a “REDcard” to save myself time. (Do as I say and not as I do … please.)

While I have reported before on the perils of using debit cards (or, in my case, the REDcard) to shop, it bears repeating that we should leave our debit cards at home when we set out for the mall, among other places.

Reported by The Week, among other periodicals, we tend to forget that credit and debit cards are NOT created equal. Credit cards are covered by the Truth in Lending Act, which places the maximum amount for fraudulent purchases at $50, plus offers the consumer dispute protection and fair credit billing to allow you to stop payment. Too bad that debit cards aren’t so generous; the Electronic Funds Transfer Act protects you from liability only if you immediately report the card’s loss or theft to your bank and before it’s been used. It gets worse, too: after three days, your liability can jump to $500 and after 60 days, the sky’s the limit.

The scenario doesn’t stop here, either. Fraudulent charges on a credit card can be reversed in two weeks or even less, while two weeks is the norm to ensure those “lost” funds are reinstated to the debit card account. And that debit card PIN? It’s not just scary bedtime stories; any type of “terminal” is more likely to be outfitted with a skimming device to steal your PIN and any other personal information, including ATMs, gas pumps, restaurant employees, and so forth. Yikes!

So how can we protect ourselves and still continue to purchase with a debit card? At the risk of sounding paranoid (which readers already know is my middle name), monitor your balances every single day. Check with your bank to see what protection policies are available. If you receive any message that appears even the slightest bit suspicious, call the company directly - but only after googling the contact info yourself. Don’t assume that one, single iota of info in a suspected phishing email is correct. In fact, never assume anything. Period.

Ellen Phillips is a retired English teacher who has written two consumer books. Email her at consumer

about Ellen Phillips...

Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears on Saturdays in the Business section of the paper. An expanded version is at under Local Business.

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
AFmanager said...

Credit cards and debit cards, despite both being plastic and approximately 3x5in, are very different things. A debit card uses money from you checking account. It's like paying cash without having the cash in your pocket. Simply, a credit card is letting you make purchases without having any funds deposited with them. It's like a loan. Most people have both and use them for different reasons.

March 11, 2014 at 9:21 a.m.
chas9 said...

AFmanager is factually correct, but I agree with Ms. Phillips. Unless you can't qualify for credit or can't handle credit wisely, the debit card has significant disadvantages.

March 13, 2014 at 11 a.m.
rahulshuklaseo said...

Debit and credit cards provides a system to access money without having to carry around cash or checkbook. If you have funds in your bank account only in that case you can use debit card whereas Credit cards are lines of credit similar to a loan to pay back in full usually within 30 days, If you don’t do then interest will be charged. If you have not cash then will provide you personal loans which will be very useful for you

September 15, 2014 at 2:44 p.m.
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