Debit Vs. Credit: There's A World Of Difference

by Julie Stewart

Over the past decade, there has been a major shift in the way many people pay for merchandise, opting to use a debit cards rather than a credit card. While that may help avoid interest charges, it can also leave the buyer open to liabilities. As part of Consumer Safety Protection week, our partner Consumer Reports has a warning about the protections you give up for the advantages of debit cards.

Erica Djibas is like more and more shoppers these days. Instead of a credit card, she uses a debit card. She likes having the money deducted from her checking account right away.

"I just like knowing that I have the money now," Djibas said. "I can pay for it now."

It's true that a debit card can help you control your spending. But Consumer Reports cautions a debit card doesn't give you all the protections of a credit card.

"If you have a dispute with a merchant and you notify the credit card company, you don't' have to pay until the matter is resolved.

But when a debit card has been used, you've already paid, so if there's any dispute with a merchant, you have to work it out on your own. And debit cards don't give you the same fraud protection.

"If a thief gets your debit card, he can empty out your account. You'll probably get the money back eventually, but in the meantime, you'll be out the money."

Another caution for debit card users: some gas stations and other merchants don't require you to punch in a personal identification number or PIN. And those merchants can put a big hold on your checking account for several days, tying up your money.

So Consumer Reports says that while debit cards can help you control your debit, it's best to use them only at retailers that require a PIN number.

If you have a problem with a debit card or a credit card issued by one of the big, national banks, a good government agency to call is the office of the Comptroller of the Currency. The OCC investigates some 100,000 complaints a year. You can reach the OCC by calling 800-613-6743.