The country-wide financial crisis has led to many more Americans using their debit cards for purchases than ever before. Debit cards can lead to better money-management by individuals because the transaction amount is directly withdrawn from the existing funds in the checking account that is linked to the card, as opposed to the purchase price being charged against a line of credit that cardholder then has to repay
While debit cards can be excellent financial tools, especially for people struggling to dig themselves out of debt, there are a few situations in which it is never a great idea to use your debit card.
If you are a big online shopper, it would behoove you to find a better way to pay for purchases via the World Wide Web than depending upon your debit card. Why? Well if you were to have a problem with your order, for example, it can be a tricky and time-consuming process to get the money in your checking account replaced should you need a refund.
Likewise, if your debit card number is stolen, it can be a challenge to make sure your account is safe and secure again, post-fraud. When buying online, using a credit card is usually a better bet.
Never, ever use a debit card for online purchases while taking advantage of free Wi-Fi access in coffee shops or other such places. Many of those wireless connections are unsecured, which makes it that much easier for thieves to hack in and steal personal data.
If you can, use cash whenever you go out to eat at a restaurant or bar. There are a lot of opportunities for fraudsters at such establishments to lift your card number and other personal information. Your card could be stolen outright or skimmed – a restaurant is one of the few places in which it’s “normal” for your card to be completely out of your sight for several minutes.
Rentals and Security Deposits
If you plan to rent a car, it’s best not to do so with a debit card. This is because the rental company will withdraw a portion of the funds in your checking account to hold as a security deposit. You will be refunded the money when you return the car. But if you rent using a credit card instead, all that will happen is a portion of your available balance will be “frozen” on behalf of the security deposit without any actual charge going through and you won’t notice any significant impact upon your account.
Consumers can also use credit cards to build credit, which they cannot do when using a debit card because all debit card transactions are immediately withdrawn from the cardholder’s checking account. So, if you are interested in building up your credit score, credit cards are the way to go.