I just read a thread where the comments heavily suggested OP use a credit card when they travel again so that it would be easier to dispute a fraudulent charge. What makes a dispute through your bank less successful?
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a debit card is your money
a credit card is the bank’s money
as you can see, banks aren’t too keen on losing their money, much more than you
Credit card networks have contracts with sellers that allow them to reverse the transaction the entire way. It is a network of “IOUs” rather than cash changing hands. They can get the “IOU” back by negating it from the recipient’s account with the network. Debit cards are much more similar to cash changing hands, it’s inherently a much less reversible transaction.
Credit cards skim much more at the point of sale, they take like 5-10% of each transaction as operational fees in addition to interest charged to card holders. Since they generate much more revenue they have more available to spend on fraud investigation, insurance, or maybe even eating the cost in some cases.
Many good answers but here my ELI5:
– debit card => money is deducted directly from your bank account. It is a bank transfer
– credit card => it is credit, so money is not deducted from your bank account immediately. The bank will advance the payment first and then every month you receive a bill from the bank to pay for all your credit card expenses.
If your debit card has been hacked and you’ve been stolen USD 100, you would need to legally prove that you actually got stolen that money, which would mean going through some legal process, maybe even going to court. Your debit card being hacked is the same as having your bank account being hacked or being robbed physically.
If your credit card has been hacked and stolen USD 100, and your bank believes you, they will not charge you and the loss is on the bank, not you. Do they keep the loss or do they have a way to get their money back? That, I’m not sure. But you, at least, don’t lose your money. Why would the bank keep the loss? I don’t know… good customer service maybe, plus I’m sure they have some insurance in place.
It isn’t. The whole thing of it being “easier” was made up on Reddit and has bounced around in the Echo Chamber until people think it’s the truth.
Chargebacks are handled by the card brand (visa/mc/Amex) not the card issuer. It makes no difference if the card is a credit or debit card, they’re covered under the same banking laws and handled the same.
So, you have a bunch of apples, and I have a bunch of money. You want to sell your apples to me, but I tell you that I am only going to pay you at the end of the month. Since I am the only one willing to buy your apples, you agree to let me buy your apples any day, and then settle up at the end of the month.
We originally agreed that I would pay $1/apple, and through the month I buy 22 apples from you. And I loved everyone. Everyone except for one, there was a bad one that was rotting. I tried to take it back to you but you said buyer beware and no refunds.
At the end of the month, I tell you that I am only giving you $21, because I decided that I shouldn’t owe you for the rotting apple, and you have to agree before I give you, your money.
This is sort of how credit card companies work.
Debit cards work like you normally would expect, where you trade the money every time that you sell an apple. Once you get the dollar from me, I would have to force/convince you to actually give the dollar back. I have much less leverage/power over you. The worst case, is that I stop being a customer, you don’t lose out on all the money.
They’re regulated under different laws. For debit cards, you’re usually responsible for between $50 and $500 of the fraud, depending on how long it takes you to catch and report it. if it takes you too long, then you’re liable for the entire charge. For credit cards, you’re never liable for more than $50.
Those are regulatory limits, so *your particular bank’s policies can be more favorable to you*. Generally speaking, most banks have much more favorable policies towards credit card fraud than they do debit card fraud since they get paid a small amount every time you use the credit card.
Then there’s the fact that what your friend is talking about doesn’t sound like card fraud but, rather, the fact that credit cards often let you file a chargeback for things like not being satisfied with the service you received.
With a debit card, the only thing you can usually issue a chargeback for is straight “someone stole your card and used it” fraud. With a credit card, you can often issue chargebacks for a wide variety of reasons, many of which don’t involve the card being stolen.
As with everything else, being able to issue a chargeback for something other than your card being stolen is a bank policy. *Your particular bank* may offer that on debit cards and not on credit cards – even though that’s not how it generally works.
When you use a debit card, the money is taken directly from your bank account. If there’s an instance of fraud, the money’s already gone from your account and is unavailable to you until the bank decides the fraud was real and restore your money. Sometimes while fraud claims are being processed, the bank will freeze your entire account, preventing you from using your money to pay for other bills, etc..
When you use a credit card, you are using the bank’s money while your money is safe. If there’s fraud, the transaction(s) are suspended and you might temporarily lose access to your credit card account while the matter is being investigated and new cards with new numbers being sent to you, but the money in your bank account stays put and available for you to use to pay for other bills, etc..
It’s usually a consequence of the regulations around borrowing money.
When you pay for something on a debit card, you’re paying with the funds from your bank account, when you pay with a credit card, you’re borrowing money from the credit card company to pay for the thing, and then paying them back later when the bill comes.
Lending money to people tends to be fairly highly regulated, because there’s a lot of potential for abuse if not regulated carefully, part of which is the idea of charge backs.
Visa and MasterCard both have degrees of protection in place on debit cards, and banks may offer additional protection, but in general, a debit card transaction is legally treated the same as paying for something in cash, because that’s effectively what it is
Credit cards are inflationary, they allow new money to be created. Banks love new money and the government likes a bit of inflation.
The protection it comes with is the incentive they provide to use it.
It’s very easy to dispute a fraud claim on a debit card. I had to dispute a claim a few years back and I had my money back within a week.
Also if there is unusual activity with my account my bank will not let the payment go through amd will ring me and let me know
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