Those protections are the main reason it’s recommend to use credit cards instead.
But it doesn’t make sense to me, why would I borrow money (credit) if I had it (debit)?
My guess is that banks deliberately do this so people can accidentally spend more money than they have and companies start charging interest.
In: Economics
Well let’s clarify something here, debit card run as a credit card has the same protections as a credit card. So if you press credit on the terminal you have those benefits. When you enter your PIN number, you are not running through the credit card network and two things are happening here, you lose the fraud coverage of that network and you are taking an extra step to ensure you are the legitimate cardholder with the card.
Now why is running through the credit card network important? Well in the case of Visa and Mastercard the dispute systems for chargebacks are built into their networks. Merchants have to agree to the dispute/arbitration processes mandated by those networks. So in a lot of cases the merchant may be on the hook for that fraud before the bank takes the hit.
Running through the debit networks, there are not the really any processes to dispute transactions unless it’s an error. In addition if fraud or a dispute comes up, the PIN being used is kind of a smoking gun that the cardholder was present. Obviously, skimmers can be used to duplicate mag stripes and capture PINs but usually that fraud is captured locally and then happens in a different region from the cardholder. It’s more obvious in these cases and the bank has regulations that require resolution in favor of the cardholder. However, in every case the bank is taking the loss on PIN based transactions and they will mitigate that loss as much as possible within their legal rights.
This info assumes US regulations and Visa and MasterCard debit cards. These rules will vary on regions and I personally have no direct experience with other brands like Amex and Discover.
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