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Credit Card vs Debit Card: Which Should You Use Online?

In case you hadn’t heard, most banks and businesses began transitioning their credit cards and credit card terminals away from magnetic stripes and toward EMV technology last October. Also referred to as “chip and pin technology” and “chip technology,” EMV stands for “Europay, MasterCard, and Visa,” and is the standard for fraud protection in most advanced countries around the world.

As Jon Krauss, senior manager of credit product management at Discover, told us earlier this year, the microchip in chip cards “generates unique, dynamic data every time a consumer completes a transaction, making it harder for fraudsters to collect their card information.”

While this is certainly good for consumers, the news does come with one caveat: Chip technology doesn’t extend to purchases made online – even if you have a card that includes it already.

Four Reasons Credit Cards Beat Debit Cards for Online Shopping

Still, most experts still suggest using credit cards for your online purchases – especially if you’re choosing between credit and debit. While the risk of fraud is always lurking in the background, credit cards come with additional protections that debit cards simply lack. Here’s what we mean:

Most credit cards come with zero-fraud liability.

“Using a credit card provides an extra layer of protection against fraud and it makes getting a refund easier,” according to Discover’s website. While certain protections are extended to both debit and credit card transactions from the federal government, most credit cards take these protections a step further by offering their own form of zero-fraud liability.

If someone does get your credit card number and makes a purchase online, chances are good you won’t be held liable for a single cent of it if you report it in a timely manner. Sadly, the same can’t be said about purchases made with debit cards at all. More on that in a minute.

Federal protections are greater for purchases made on credit.

Thanks to the passage of the Fair Credit Billing Act, liability for unauthorized charges made with credit is limited to $50 for both in-person and online credit transactions as long as you report the incident within 60 days.

However, as noted above, most credit cards offer zero-fraud liability, meaning you won’t be on the hook for a penny. Most credit card issuers will put the fraudulent charge on hold while they conduct an investigation so you won’t be out the money in the interim, either.

Debit cards, though, are a whole ‘nother animal. Since the money you spend comes out of your bank account, you may have to wait days or weeks to get a refund for a fraudulent transaction made with your card. Further, your liability jumps to $500 if you don’t catch the fraudulent transaction within two business days – and you could even have your bank account drained with no recourse after that.

Here’s how the Federal Trade Commission words it: If a fraudulent transaction made with debit goes unreported for more than 60 days after your statement is sent, you could be on the hook for “all the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account.”

Use a credit card for online purchases: It will offer more consumer protections than a debit card does in the event of fraud.