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How Can I Safely Use My Debit Card?

Treat it like a credit card and you'll get better protection

Q. I've heard that paying with a debit card can be less secure than using a credit card. But I want to avoid interest on my credit card. So how and where can I use my debit card safely?

A. "How" is easy. It's a little-known fact that when you swipe your debit card through a point-of-sale device, you can choose the "credit" option that comes up on the screen instead of "debit."

See also: Debit or credit? Which card to use when.

This way, the purchase amount will still be deducted directly from your bank account, but the transaction will be processed through a credit card network, providing you greater legal protection.

Under the law, you're liable for only $50 from credit card fraud. With a debit card, you have just two days to report an unauthorized transfer or loss or else you could be out up to $500.

Plus a "credit" transaction may take a few days to be processed, giving your money a longer stay in your account, as opposed to the immediate withdrawal that comes if you pick "debit."

Another advantage is that by selecting "credit," you don't have to enter your card's PIN. That means that if crooks have attached a "skimmer" to the point-of-sale device to steal personal data off your card, you'll be in a better position. Without the PIN, the thieves won't be able to make duplicate cards to empty your bank account with ATM cash withdrawals.

"Where" to use a debit card? Generally, you're fine using yours at places where there's a clerk present, such as a supermarket checkout line. (Skimmers are generally only attached to devices that are untended, such as gas station pumps.) But don't forget that "credit" option.

Credit cards remain the better choice for:

  • Online purchases. If a debit card's number is stolen online, there's more vulnerability because it allows crooks to make instant withdrawals from your bank account. With a credit card, you have time to refuse payment.
  • Big-ticket purchases. Credit cards offer stronger "dispute rights" if the product proves defective. Many also have extended warranty policies, or insurance that kicks in if you rent a car or buy electronics.
  • Purchases for which the final bill hasn't been determined. Gas stations, hotels and other facilities may place an advance hold on fixed amounts of money in your account when you offer a debit card for payment.

For instance, a $50 hold might be placed on your account when you start pumping what turns out to be the $30.57 of gas needed to fill your tank. You could be denied use of the remaining $19.43 for days until the transaction fully goes through the payment system.

Also, hotels typically don't charge your credit card until you check in. But with a debit card, they may place a hold on your funds when you make the reservations (a potential problem if you later cancel).

  • Getting rewards for purchases. Some debit cards have such programs, but you can expect better offerings with credit cards.

As for your concern about controlling credit card interest, the key is to manage your spending — there's no interest charge if you pay off your balance each month. If you have to carry a balance, try to pay at least half of it each month to minimize interest.

You may also like: Debit or ATM card for getting cash? >>

Sid Kirchheimer writes about consumer and health issues.

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