Money Savers: Debit Cards vs. Credit Cards

As the popularity of paying with plastic has grown, so has the number of criminals trying to swipe your personal information.

Just last summer, a California couple set up a skimming device at a New Hope gas station and stole information from more than 400 people. Using your card at a gas station or outdoor ATM might be considered risky, but experts say if money is stolen, some of it can be recovered if the charges are discovered and reported in time.

"Fraud protection is the same on a credit or debit card so the consumer is liable up to the first $50 of any fraudulent activity on a debit or credit card if it is reported in first 60 days," says Vicki Erickson with TopLine Federal Credit Union. She says the choice to use debit or credit is a personal one. "Use the card that is suited for your financial situation," says Erickson.  

Debit cards are like electronic checks, where you can deduct money straight out of your checking account.

"Most often, the reason why consumer choose debit cards are for personal reasons, as a better way to manage finances and their budget," says Erickson.

Credit cards act like a short-term loan and they charge interest. People can also use credit cards to boost a credit score.

"If you are making payments on time, it helps establish your score. Those looking to establish credit or rebuild credit, a credit card might be a better option," says Erickson.

Nicole Middendorf at Prosperwell Financial says to use caution when spending with credit cards so you aren't tempted to go overbudget. However if used effectively, you can take advantage of several loyality perks.

"I'm an advocate of getting benefits from using a credit cards.  There's miles or cash back programs, that you usually don't have that on a debit card," says Middendorf. "You don't want to use a credit card to live beyond your means, you want to stick within your means and make sure you pay your credit card bill in full every month."

Another option for spending is to use a personalized reloadable prepaid card that you can load from a checking account or credit card. This card offers additional fraud protection because if the card is registred, you are not liable for any unexplained charges. Vicki Erickson recommends this card as a good option for travel, online purchases, or for college students. 

The FDIC recommends three ways to protect yourself from credit or debit card fraud.
 1) Don't give out your number over the phone, online or by text.
 2) If something at an outdoor ATM or gas station seems suspicious, alert the institution or authorities.
 3) Review your statements and bills each month and be on the lookout for suspicious activity. If you see it, report it immediately.

Shannon Slatton, reporting

Wednesday, October 16, 2013



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