Guest Blogger Arone Silverman
Debit Card purchases are up! Consumers have taken to what seems like a fiscally-responsible way of spending by using debit-cards over credit cards. Having a card that is linked to your checking account helps prevent you from paying high interest on purchases. At the same time, debit-cards don’t offer the same consumer protections which could cost you more in the end. As much as your identity!
People are looking for ways to tighten their budget, using a debit-card is a method that keeps you from spending money you don’t have. This type of spending is becoming the normal trend as Visa has seen its’ debit-transactions increase. They announced this past week that for the first time, debit cards surpassed credit-card purchases during the last three months of 2008 making up 50.4% of total processed transactions.
Unfortunately, along with dropping all the interest and fees of common credit cards, consumers give up their financial protection. Credit cards offer the most protection when it comes to unauthorized transactions and getting charges reversed for goods that arrive broken or not on time. However, shoppers who routinely carry a balance will end up paying more by using their credit cards. Here Consumers Union compares your protection and liability when it comes to Credit Cards and Debit Cards.
* Limited liability for unauthorized transactions: Under federal law, you are only on the hook for up to the first $50 in unauthorized charges once you notify your bank.
* Right to dispute a charge: You have the right to dispute a charge if you return an item to a store and the retailer fails to credit your account
* Right to withhold payment: You do not have to make any payments while a disputed charge is under review.
* Limited liability for unauthorized transactions: If your card is lost or stolen, your liability depends on when you report it to your bank. If you report the unauthorized transaction within two business days, your liability is limited to $50. However, if you don’t report it within this time frame, you can be liable for up to $500. If your card was not lost or stolen, you must report unauthorized charges within 60 days to avoid losing any money.
* No right to dispute a charge
* No right to stop payment for the purchase
* If you decide to use a debit card for online purchases, you should link it to a separate account to protect yourself from a temporary loss of all your money and better protect yourself from identity theft