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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There are laws that protect credit cards and do not protect debit cards.
To use a credit card in the US, you just need the physical card or card number.
To use a debit card in the US, you have to have a private PIN.
The assumption is that if someone had the PIN, it was authorized.
But wait! I can use my debit card like a credit card and just swipe it! Not always, and typically the transactions that are done this way are protected under the same credit card rules since the debit card is being used as a credit card in this situation
A major credit card company has a well-funded fraud department because it’s their money on the line. The last thing they want is a reputation for widespread fraud, and people jumping to another card out of fear of owing stolen money.
Outside of the big banks, most banks don’t have the manpower to chase down every dispute, nor the manpower to complete resolve issues. They also lack the funds to eat any potential losses if they can’t resolve the whole situation and get their own money back.
It just comes down to resources available.
Because a credit card is not your money that’s been stolen. It’s the banks money.
When a debit card has been stolen, that’s *your* money that’s been stolen. Not the banks.
The bank doesn’t really care if *your* money gets stolen. But they care *a lot* about *their* money being stolen.
Both the laws and the contractual rules between credit cards and debit cards are very different. Technically both have a responsibility to help you dispute charges that are either fraudulent or otherwise inappropriate but there’s a couple key factors that make credit cards better. For starters it’s not your money. When you dispute a charge it usually goes on hold right away which means that no longer affects your ability to use the rest of your credit and shouldn’t be accruing interest. That also means that even if it takes a while to get to that point you aren’t sitting there with zero cash in your actual bank account to pay bills and do other things. So you don’t have to worry about missing your mortgage or your phone payment because somebody added an extra zero when running a hotel transaction or something
Then add to that, the fraud protection rules usually seem to give you more time to dispute credit cards. You have a longer amount of time looking backwards to spot a charge and raise it as a problem before they say it’s too late you should have already dealt with this earlier. That goes for both actual fraud where a charge never should have been placed and Merchant disputes where you didn’t get what you paid for.
A debit card happens kind of instantly. Credit cards seems to take a few days to check things out, wait and then two days later after some magical bullshit it’s all good to go.
The credit card company is the party who pays the bill in the first place. Then the credit card company asks you to pay them, and you’re paying the tab they are keeping for you, with interest and per-purchase surcharges.
You actually have no standing for a credit card fraudulent charge — only the credit card company has standing to pursue an action, because they have paid, not you.
Your credit card sometimes texts or calls you with “security questions” — did you really make this purchase? And if you report a fraudulent charge, or they can’t get hold of you, or there is some confusion, they want to put a security hold on your card, or to cancel your card and re-issue a new one. At that point, they’ll make you verify your charges, and accept the hold or cancellation/re-issue, or you are liable for any further charges. Because they are fronting the payment, and if you are being responsible, it’s up to them to track down theft, not you.
A debit card is essentially a version of bank check processed using the same technology as credit cards. So you are paying the bill by drawing directly on funds in your account. You can also get a pre-loaded debit card, not attached to a bank account. Using a debit card is just like writing a check: you might have overdraft protection, but you don’t have credit or a credit limit. It’s also only linked to one account.
(There also used to be something called a “charge card,” from American Express, that you had to pay off each month — it wasn’t credit, and it didn’t draw on your existing funds in a bank account, it was based on the old practice of using “traveler’s checks.” They guaranteed you could pay if you did not have local currency or could not write a personal check from your bank account when you were traveling in a foreign country.)
Now, with card technology (rfid chips), you can basically write a personal check, or draw on your bank account directly while traveling by using a debit card.
But once you have drawn funds using a debit card, the money is gone. It is like cash.
So you should only use the debit card to draw physical cash from a trusted ATM when traveling. You should not give a debit card to a vendor — that is just like handing the vendor cash, except that you are also potentially giving them access to all the cash in that account or pre-loaded on that card!
You should give a credit card to a vendor.
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