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
Debit cards do typically provide protection. The difference is you are out that money while the fraud is investigated. With a credit card the credit company is out the money. If you are living paycheck to paycheck the money you’re out can have a huge negative effect on your life.
I use my debit card for everyday purchases in my own country, because any transaction I do with it is free from any fees.
I do use my credit card if I am abroad to avoid the currency exchange fees.
In the UK, credit purchases are regulated under the consumer credit act. Any credit purchase has to comply with that, including credit card purchases (subject to minimum and maximum limits).
Effectively the credit purchase is a contract and if there’s a breach of contract, the credit card company is liable. The breach could be that the goods fail to arrive, they are not as described, or that they fail when they shouldn’t. As the purchaser, I can make a charge back under section 75. The bank has to refund my card and then deal with the supplier dispute.
This protection doesn’t exist on debit cards.
You’re protected from fraud either way. The problem is that it may take some time to get the money back and there are some big things like rent, mortgage, and utilities that need to be paid from a bank account with an actual cash balance. If someone fraudulently charges a few thousand to my credit card, it isn’t a big deal. I still have the cash balance to pay my rent and eat until things get straightened out. If my bank account gets drained, it could result in late fees and credit score problems when I miss a big payment. Plus I may not be able to eat and get gas if I don’t have sufficient credit elsewhere.
One (cynical) answer may be because when a Credit Card is involved it’s someone else’s money, and that someone is a large institutional lender; whereas when a Debit Card is involved it’s an individual and their own money.
Because youre using your money with debit cards and thats hard to get back where as credit is just a promise to pay so even if they cancel the fraudulent charges you still pay back the legit ones, in a nutshell
A credit card cash be used if someone gets ahold of the physical card, and sometimes if they just get the card number. A debit card can’t be used (as debit, you can still run it as credit) without the PIN, which you’re not supposed to give to anyone else. With a debit transaction, it’s presumed to be you who did it, since nobody else is supposed to be able to. That makes it a lot harder to claim fraud.
The short answer is that banks care more about protecting their money than they care for your money. It’s also one more reason to encourage you to use one instead of a debit card. Banks make a killing from credit cards so they try to get people to use them as much as possible. The good news is that as long as you pay them off on time, you don’t spend extra money
>why would I borrow money (credit) if I had it (debit)?
Because many credit cards come with perks if you use them. If you have the cash money to immediately pay off your credit card before you incur any interest, you are literally losing money by not using your credit card.
I’ve amassed several thousand dollars worth of flight credits simply by using my credit card for regular purchase and I have paid a grand total of $0 in interest.
There’s all kinds of different rewards. Cash back, travel/flight credit, etc. Just depends on the specific card you have.
The protection comes from it being the bank’s money tied up in a charge dispute or fraudulent charge, meaning the money isn’t gone from *your* bank account while resolving the issue. The credit card created a layer of protection between your bank account and merchants. Just spend what you can pay off each month, and pay the balance in full each month. Then there are no negative repercussions like interest charges.
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