Are debit cards safer than credit cards?

[CanadianDaniel]

So, one personal finance writer is arguing that debit cards are safer than credit cards because cyber thieves can steal up to the available (large?) limit on a credit card. A debit card theft is constrained by how much you have in one bank account. Hmmm ...

1) I dunno -- debit cards can unlock to a whole set of linked accounts including lines of credit with much higher amounts.
What do you think?

2) Are debit cards more vulnerable to additional charges like NSF cheques and late payment penalties when victims' debit-linked accounts are frozen for a fraud investigation? As long as you follow the rules, my understanding is that credit cards won't involve such charges.

3) Banks have built-in systems to check for unusual purchases on your credit card. I know because someone in Portugal once intercepted my credit card details and was caught trying to input fraudulent charges. The card company immediately phoned me after identifying the suspicious charges from a foreign processor (and I hadn't advised the card issuer I was going to travel).

Are there similar monitoring systems for debit card account?

I know credit cards involve money that belongs to the bank, but there is that zero liability policy that sways my security meter away from debit cards -- at least for online purchases and out-of-Canada travel.

[Brooke_]

Debit cards have all the same safety features as credit cards do. If your debit card has been compromised the bank will notify you via TELEPHONE CALL and you just go into the bank to change your PIN (now that chip cards are out, all you need to do is change your PIN and you're good to go).
Also, if fraud does happen in your accounts, just like a credit card, you are not liable so long as you haven't openly given anyone else your PIN.
For example, if you give your debit card to your spouse to go to the bank and deposit money, and they give the card to the teller, well they aren't allowed to use that card for your transaction because it isn't yours, you must have the account number, so you say "ok well I'll just do it at the ATM". Now the bank knows that you have your spouse's PIN because you admitted you can do it at the ATM. Now you cannot claim fraud in your account ever, because you share your private information with others.

[lecale]

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[Shwa Girl]

OP. I think using debit or credit responsibility is the answer. I think people should check the debit and credit statements very regularly. Also they should change pins annually (minimum) and get new cards regularly.

But, don't forget about good old cash money. Using cash for small purchases decreases the interest charges of credit and people tend to spend less using cash than using debit or credit (the psychology of using plastic versus paper/coin money)

[lecale]

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[Zonny]

OP. I think using debit or credit responsibility is the answer. I think people should check the debit and credit statements very regularly. Also they should change pins annually (minimum) and get new cards regularly.

But, don't forget about good old cash money. Using cash for small purchases decreases the interest charges of credit and people tend to spend less using cash than using debit or credit (the psychology of using plastic versus paper/coin money)

I don't get a paper bill on my credit card, and DH and I both look at it every couple of days. If there's something fishy, he or I will ask each other, what's that? We've never had anything the other can't explain.

I think you're right that if you have a set amount of cash to use at the grocery store or whatever, you're more inclined to stick to that budget. I use a credit card for everything, as I like the freebies I get from my points, but acknowledge that I probably spend more because I have the whole account rather than a set amount to stick to. But I don't buy a lot of stuff we don't need. For our credit card, the annual fee more than pays for itself in free stuff and perks like insurance on rental cars.

However, if I'm understanding your statement correctly, "Using cash for small purchases decreases the interest charges of credit), I disagree. If you're paying it off every month, doesn't matter if you're charging $200 worth of groceries or $2 worth of coffee, your interest is the same - zero!

Overall, I think the credit card is safer.

[Shwa Girl]

For our credit card, the annual fee more than pays for itself in free stuff and perks like insurance on rental cars.

Can you ask them to waive the annual fee? Some credit card companies will do this for their loyal customers. Doesn't hurt to ask.

We have car insurance that covers any rental car we may use. No additional charge. Some car insurance companies to this too.

[mandolinatou]

I think it depends on the bank. I wouldn't want my american express card compromised as I think you have three days to report it legally. I don't use debt cards to buy ever because I pay for debt expenses whereas the store owner pays for credit card processing expenses. I don't believe in paying the banks anything. BMOs expense wheel tells me I spend less than 99.9% of Canadians in bank fees...because I never pay bank fees or credit card fees. I spend less than what I have every month and when I was a student this meant using my contacts and razors only for special events and all my clothing had to cost less than 10 dollars an outfit. I managed, granted I was not classy but I managed. Now I feel wealthy on a salary less than 40K. I no longer ration the basics...but then and now I pay 0 in bank fees. Bank fees are not necessary and they add up.

[lecale]

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[CanadianDaniel]

Hi lecale -- These opinions are from an article submitted by a recent university grad to a rate accumulator blog (an otherwise nice piece of writing, I'd prefer not to specify the site out of sensitivity to all her hard work). Some of the comments were based on quotes directly from a Canadian Bankers Association rep, who of course has a vested interest in making debit look as safe as credit. DB's experience suggests otherwise. Thanks!

[Ciel]

If debit cards were as safe as credit cards, you'd think the banks would let customers decide what limits to put on their debit cards! No, you have to play ball with the predetermined amounts. At one time, TD (non-chipped cards) allowed a $100 max on debit and I really went for it when money was not plentiful. Then I got the letter in the mail about two years later informing me that the $500 limit was the new "low limit" on cards. And I like to think I was not the only customer freaked about it because the card terms place onus on cardholders to be responsible etc but also, I did not have funds to support that limit. The bank staff would not allow me to go back to $100 because that limit no longer was available.