Shopping With Debit Cards Exposes Consumers To More Risks

The holiday season is also a peak holiday season. This means that consumer spending is going to go up soon. However, consumers are still reeling from the effects of the credit card crisis, especially those who recently paid of or are still paying off their credit card debts. Recent figures show that approximately twelve million consumers still have debts from purchases made last year on their credit cards.

The continuing decline in popularity of credit cards have resulted in the move of many consumers to use debit cards instead. However, debit cards may not be the best option for consumers out shopping this holiday season.

Consumers like debit cards because they are tied to a balance in a bank account. In contrast, credit cards rely on loans to pay for consumer purchases. Consumers feel that, because debit cards are linked to a bank account, the chances that they have control over their spending is much better than if they were to opt for credit cards. However, according to Mandy Walker of Consumer Reports, debit cards may bring up more problems for consumers instead.

Walker says that, when consumers buy using debit cards, it is better for them to avoid big ticket item purchases. A major problem with using debit cards for large purchases is that consumers cannot dispute their debit card charges similar to the way they can with credit cards. Aside from that, debit cards also do not have that perk of giving longer warranties to major purchases like a lot of credit cards automatically give out.

Consumer reports also said that shopping online with debit cards is too much of a risk for consumers to consider. Because debit cards are directly linked to a consumer’s bank account, it is likely that, if a thief should ever get access to the debit information of a consumer, he or she can quickly empty that consumer’s bank account. The nature of debit cards takes stop payments out of the question. Consumers are also liable for a much higher amount in case of fraudulent purchases in their debit cards. While, for credit cards, consumer liability for fraudulent use is limited to fifty dollars, for debit cards, consumers can be liable for as high as five hundred dollars.

Debit cards are also not as “fee” safe as most consumers think. Overdraft, one of the most expensive fee consumers can get from their credit cards are also present in debit cards. In fact, debit cards are actually much more prone to overdraft fees. There are already new laws against overdraft fees for credit cards but these laws do not apply to debit cards.