'There's almost no reason you should use a debit card' for holiday purchases, says consumer advocate: Here's why

"With debit cards, it's important to report the card quickly when you notice it's missing."


As eager consumers gear up for the busiest shopping week of the year, experts say it's important to keep safety top of mind. Over 1 in 5 Americans, 21%, have been a victim of fraud on a credit or debit card in the last year, according to a new Apple Pay Holiday Shopping Survey. Morning Consult, which conducted the survey for Apple, polled 2,212 U.S. adults.

Millennials were the most likely to experience fraud. Three in 10, 30%, have been the victim of fraud in the last year, compared to 22% of Gen Zers, 21% of Gen Xers, and 14% of boomers.

Looking ahead to Black Friday and Cyber Monday and the holiday shopping season, 49% of Americans are concerned about giving their credit card number to a merchant when shopping online and 36% when shopping in-store, according to the survey.

There are a few easy things you can do to shop smart and stay safe, though, experts say. For example: Use credit instead of debit, if possible.

'There's almost no reason' to buy items with a debit card

One of the most effective precautions is to do your shopping with a credit card. "In my mind, unless you don't have a credit card, there's almost no reason that you should use a debit card for purchases," says Edgar Dworsky, founder and editor of Consumer World. "You have more consumer rights."

Under the Fair Credit Billing Act, there's a maximum liability, or the amount of funds for which you will be held accountable, for unauthorized or fraudulent purchases on a credit card. And most issuers waive even that. Protections for debit card transactions, which fall under the Electronic Funds Transfer Act, are less robust.

Plus, there are often better benefits with credit cards for the authorized purchases you make, says Dworsky. "Let's say you bought an item and it's defective," he says. "You can't call the debit card issuer and say, 'I want to charge back the TV I put on my debit card because it doesn't work.'" That's something you can do with a credit card thanks to the FCBA.

Check in with your specific credit card providers to see if they have even more robust policies or other purchase protections in place. For example, 6% of credit cards from the 10 largest issuers offer price protection, according to WalletHub data, and most major credit cards will extend the original manufacturer's warranty on certain eligible purchases, free of charge. 

'Keep an eye' on your cards and accounts

While you are out and about shopping this weekend, be vigilant. "Keep an eye on your payment cards," says Linda Sherry, director of national priorities at Consumer Action. Quick reporting of a lost or stolen card can be key to halting fraud.

"With debit cards, it's important to report the card quickly when you notice it's missing," she says. "You'll have the least liability for any unauthorized use within two days."

How people with 10+ credit cards make it work

Video by Mariam Abdallah

For both in-person use and shopping online, use the online account or mobile app tied to your credit card provider to check frequently for unauthorized uses, she says. Many issuers allow you to set up alerts for suspicious charges.

That vigilance can have the added benefit of helping you avoid overspending. With holiday shoppers wanting to spend more this year and 2 in 5 willing to go into deeper credit card debt to fund these purchases, it is important to be mindful and keep your spending in check. 

"Consider using a budget app to see your big picture," says Sherry. And "try to use only one or two cards if you can. Two credit cards are optimal for money management."

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