Credit or debit? Although both cards look the same, they offer different protections.
Under federal law, if your credit card is used to make unauthorized charges after it is lost or stolen, you’re liable for only $50 – no matter the amount and with no time restrictions to report the fraud. And many issuers won’t even charge the $50 for valued customers.
But with a debit card, you have just two business days to report an unauthorized loss or money transfer, or you could be liable for up to $500. Wait more than 60 calendar days after your statement is mailed and you could be responsible for all money pilfered from its connected account.
Although debit cards offer no-interest savings – which may factor for some plastic users – there are six places where you should never use them.
In addition to ATM machines, gas pumps are a popular target for “skimming,” in which crooks place a portable card-reading device inside the pump. When a motorist inserts a debit card and enters the required personal identification number, the hidden device (which can be purchased on the Internet for less than $100) captures both the data from the card’s magnetic stripe and the PIN. Later, the device is retrieved, and the stolen data is used to create a duplicate card to raid the victim’s bank account.
Why gas stations? With only a handful of manufacturers of gas pumps, one key in the hands of a thief who gets a job at one station can be used to open pumps and install other skimmers elsewhere, especially at night or when unattended. And with older pumps, PINs may not be encrypted. If you must use a debit card (and it has a Visa or MasterCard logo versus being a cash-withdrawal-only card), choose the “credit” screen prompt, instead of “debit,” so you don’t have to enter your PIN. This way, the purchase amount will still be deducted directly from your bank account, but it’s processed through a credit card network, providing greater protection if fraud occurs.
Along with providing added security should the retailer fall victim to a data breach – a hacker can’t overdraft your bank account with a credit card – most credit cards (versus some debit cards) offer extra protection perks. If you don’t receive the merchandise, it’s defective or the wrong item, and the vendor won’t issue a refund, it’s easier to dispute charges with a credit card.
Many credit cards also offer extended product warranties (usually for one year beyond what’s offered by the manufacturer), and some provide price protection up to 90 days, issuing you the difference if the identical item is sold for a lower price than you paid. Although certain debit cards offer these protections, the hassle factor can be greater.
Read full article here: http://blog.aarp.org/2014/05/23/6-places-to-never-use-a-debit-card/