Comment by wombat_trouble
4 years ago
This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
Not that it buys you much; there's plenty of small / specialty merchants who might offer you a discount for paying with cash or check, but they treat credit and debit the same.
> This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
There is indeed usually not much difference in how banks handle the fraud on credit cards and debit cards.
But it is vital to understand that with credit cards, you are off the hook on fraud due to regulations (in the USA, don't know other countries laws). With debit cards, you're probably off the hook on fraud only because the bank wants to be nice in the name of customer service (usually and only up to a point).
So with debit card fraud the bank might decide they don't really want to keep you as a customer and things become your problem. With a credit card it'll never be your problem because the regulations make it so.
> with credit cards, you are off the hook on fraud due to regulations
If your issuer contractually offers zero liability for debit fraud, that is just as binding as regulations – and most do.
And if they don't, from a regulatory point of view, the liability for debit cards is limited to $500 when reported within 60 days of receiving your statement, compared to $50 for credit cards: Certainly a difference, but definitely not as drastic as "you're always on the hook" vs. "never your problem" as it is often characterized.
> So with debit card fraud the bank might decide they don't really want to keep you as a customer and things become your problem. With a credit card it'll never be your problem because the regulations make it so.
The regulations say nothing about the issuer having to keep you as a customer going forward. I highly doubt that, given reoccurring fraud cases even after a couple of card/number replacements, credit card issuers would be keeping you as a customer any more than debit issuers.
> If your issuer contractually offers zero liability for debit fraud, that is just as binding as regulations – and most do.
Every bank card or account I've ever had regularly send out notices saying they have changed their terms of service and your continued use of the account indicates your agreement to the new terms.
In other words they can change those any time they want unilaterally and you probably won't even notice (because who reads those terms of service?)
You may also want to read all the fine print to see if they carve themselves any exceptions.
The great benefit of the protections under credit card regulations is not having to worry about any such shenanigans. The bank can't change the regulation so you know you're always protected, full stop.
Also remember that fraud on a debit card hits your account balance immediately, even if you can later argue to have it credited. Fraud on a credit card simply hits the credit card and can't touch your real money. Think of a credit card as cloudflare layer for your bank account agains fraud DoS.
I'm always very puzzled as why in the US one would ever use a debit card (I say US because I'm not familiar with regulations in other countries). A credit card offers stronger protections, stronger account isolation and cash back rewards.
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On my credit card I've reported fraud and been reimbursed immediately. On my debit card there's a lot more hassle. I can stop a transaction and I can report the fraud, but it takes a long time to resolve (usually weeks). They're two different systems entirely. For instance, I signed up for a single month of the LA Times as part of a charity drive. They continued billing me for over a year which is clearly fraud. The best I could do was stop the transaction that month and I'd have to contact them for reimbursement before my bank would step in. Basically, "try to do business with the fraudsters first, if they refuse we might help."