5 Reasons You Probably Shouldn’t Use a Debit Card (2024)

FAQs

Why shouldn't we use debit cards? ›

With a debit card, the money is already gone from your checking account, and you're trying to get your own money back. Debit cards are more vulnerable to fraud than credit cards, according to the Identity Theft Resource Center in California, a nonprofit consumer education organization.

Using a debit card opens up the possibility that the thief will gain access to the funds in your checking account. Protections are in place if a debit card has been lost or stolen and used fraudulently, but only if you notify your banking institution.

Avoid public networks. Public internet networks at coffee shops, airports, and other public places may be where account hackers place devices that can intercept your debit card information if you go online to make a transaction. Use a strong password. Creating a complex password helps further secure your debit card.

Generally, debit cards don't give rewards or cashback earnings for purchases. Those that do offer very low earning rates compared to credit cards. This means that using a debit card to buy $100 in fuel might cause the cardholder to miss out on a 5% cashback earning promotion from their credit card.

Debit cards are a step above cash in terms of security, but are still a relatively risky payment method. Debit cards could leave you liable for funds lost to fraud, provide criminals direct access to your bank accounts, expose you to overdraft fees and risk tying up your money in hold charges.

Credit cards often offer better fraud protection

With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used. You could be liable for much more for unauthorized transactions on your debit card.

Other types of card damage

Dirt and oils can also cause issues with your magnetic strip, while prolonged exposure to liquids may also damage EMV chips — although most credit and debit cards utilize water resistant designs. Keep in mind: Your card's magnetic strip can also be damaged by heat.

Simply swiping a debit card at a card reader can put you at risk of fraud, but you can easily reduce this risk by knowing where not to swipe your card. Illegally obtaining credit or debit-card information from a card reader is a type of scam called skimming.

Can someone use my debit card without my PIN? ›

Fraudsters can still use your debit card even if they don't have the card itself. They don't even need your PIN—just your card number. If you've used your debit card for an off-line transaction (a transaction without your PIN), your receipt will show your full debit card number.

Bank investigators will usually start with the transaction data and look for likely indicators of fraud. Time stamps, location data, IP addresses, and other elements can be used to prove whether or not the cardholder was involved in the transaction.

The risk of fraud often outweighs the convenience of debit cards. If a credit card is stolen or hacked using online scams, a card skimmer or a gas pump skimmer and unauthorized purchases are made, you often have liability protection. When a debit card is used fraudulently, it's your personal funds that can be drained.

When you bank or shop on public Wi-Fi networks, hackers can use keylogging software to capture everything you type, including your name, debit card account number and PIN. Phishing. Be wary of messages soliciting your account information.

If you notify your bank or credit union within two business days of discovering the loss or theft of the card, the bank or credit union can't hold you responsible for more than the amount of any unauthorized transactions or $50, whichever is less.

Unlike with credit cards, where the cardholder is not out any money while fraud is being investigated, debit cards take the money from your account immediately. Gift or prepaid debit cards you do not plan to use today. A lost gift card may be impossible to cancel and replace.

Credit cards are safer to carry and use

If thieves go on a spending spree with your credit cards, however, you generally won't be held responsible for fraudulent purchases. It may take some time to sort out the resulting mess, but you won't lose any of your money. Debit cards, too, pose a risk.

Debit cards lack the same robust protections as credit cards, so you might be at greater risk of fraud with multiple debit cards to manage. Having multiple checking accounts can complicate your finances.

Perhaps the most obvious drawback of using a credit card is paying interest. Credit cards tend to charge high interest rates, which can drag you deeper and deeper in debt if you're not careful. The good news: Interest isn't inevitable. If you pay your balance in full every month, you won't pay interest at all.