If you heed only one tip this holiday shopping season, make it this one: pick the right plastic. A recent AARP survey found that nearly 70% of people shopping online this holiday season plan to pay with a debit card. Choosing this form of payment can make you more vulnerable to fraud losses.
 
Debit cards deduct money directly from the account it’s connected to. If your card is compromised and the thief goes on a spending spree, the money drained from your account is YOUR money. When you use a credit card and it’s compromised, the thief isn’t spending money from your account but rather from the credit your bank has provided.
 
Both cards are governed by consumer protections – but there’s a ‘but’. When your credit card is used fraudulently, the issuing credit company will absorb the losses from the shopping spree the thief enjoys. Your costs may be limited to $50, but most issuers waive that.
 
When your debit card is compromised, your money is gone until you report it and the bank completes an investigation, which could take several weeks.  If you’re relying on that account to pay your rent or mortgage, that delay can put you in a real bind. And if you fail to report the fraud within 60 days, you may not have any recourse to recover your losses at all.  In other words, it’s usually harder to get your money back from the scammer with a debit account.
 
When shopping online this holiday season do yourself, and your bank account, a favor and leave the debit card in your wallet.
Be a fraud fighter!  If you can spot a scam, you can stop a scam.
 
The AARP Fraud Watch Network is a free resource for all. Learn how to proactively spot scams or get guidance if you’ve been targeted at www.aarp.org/fraudwatchnetwork.