by Lyle Daly | Updated July 21, 2021 - First published on Jan. 7, 2019
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No one wants to lose money or be a victim of fraud. Here’s why credit cards are the payment method that will keep you the safest.
Some of the advantages credit cards have over debit cards and cash as a payment method are obvious. The best credit cards can earn you quite a bit back in rewards. They’ll also help you build your credit. What consumers often don’t realize, though, is that credit cards are also the most secure payment method you can find.
Considering how rampant fraud is and that a new major data breach is announced seemingly every few months, security is more important than ever. When you’re picking your primary payment method, there are several key reasons why a credit card is the smartest choice.
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Since credit cards aren’t linked to your bank account, they provide an extra layer of security. When your credit card is used, it’s the card issuer that’s paying for the transaction, at least until you pay the bill.
If you were to lose your wallet, you wouldn’t need to worry about someone draining your bank account, like they could with your debit card. You’ll just need to contact your card issuer to get a replacement credit card.
Fraudulent charges are a hassle, but at least with a credit card, there are consumer protections that will limit your liability. Here’s what the Fair Credit Billing Act stipulates regarding credit card fraud:
With a lost or stolen debit card, you’d be liable for up to $50 in fraudulent transactions if you report it within two days, up to $500 if you report it within 60 days of the statement with those charges being sent to you, or an unlimited amount for any notifications later than that.
And even though your bank will be refunding you for some or all of the fraudulent charges, you’ll be out that money until they’ve investigated.
Card issuers now let you provide your phone number to register for fraud alerts. Once your card issuer has your phone number on file and your consent to receive texts, they will send you a message for any suspicious transactions, such as larger-than-usual purchases.
These alerts can be a big help if your credit card number is compromised and you don’t realize. Instead of having someone else use your credit card without your knowledge for days or weeks, you’ll know right away and can cancel the card.
Whether you’re disputing a transaction because it’s fraudulent or due to an issue with the product or service, the dispute process will be more convenient for you with a credit card. It goes back to how your credit card isn’t linked to your money.
While you dispute a credit card transaction, your card issuer freezes it, meaning you don’t need to pay for it until the dispute is over. If your card issuer rules in your favor on your dispute, then you don’t need to pay for the transaction at all.
With a debit card dispute, the money would already be gone from your bank account. If your card issuer rules in your favor, then they’ll do a chargeback to get your money back from the merchant, but that means you won’t have that money throughout the dispute process.
By now, all the major card issuers in the United States have moved on to chip cards. That’s good news from a security standpoint, because the difference between magnetic strip and chip technology is like comparing an unlocked front door to a bank vault.
The sophisticated encryption of chip cards helps prevent counterfeiters from stealing card information during point-of-sale transactions. In particular, the inexpensive credit card skimmers that counterfeiters would use to steal credit card information aren’t effective for chip transactions.
When you consider how much safer and more convenient it is to pay by credit card, it makes sense to use one as your primary payment method. Carry a little cash if you think you’ll need it, but otherwise, carrying only a credit card puts you at a much lower risk than carrying a wad of cash or a debit card everywhere you go.
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