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Why You Shouldn’t Use Your Debit Card To Shop Online

Debit cards are used by many consumers for all purchases. Debit cards are better than credit cards for avoiding debt. In contrast to using a credit card, your bank account will be debited directly, so there’s little chance of spending more than you have.

Credit cards are a better option when shopping online, however.

The risk of fraud is higher when using a debit card for online purchases. Moreover, every time you pay with a debit card in a store or online, you’re giving up important consumer protections.

You may want to use a credit card instead of a debit card for all the reasons below.

1. Fraud may be a risk for you

When purchases are made with your debit card or checking account number, you are responsible for the purchases. Debit cards do not benefit from the same fraud protections as credit cards, thanks to rules in the Fair Credit Billing Act (FCBA).

You might lose all your savings if someone finds your debit card number. Money cannot be refunded if you don’t notice or report it in time. 

You are liable for fraud based on when you discover it and report it to the Federal Trade Commission (FTC). In such an instance, you will only be liable for losses up to $50 if you report the fraud within two business days of discovering it. Immediately after receiving your statement, you have two to sixty days to report fraud. Upon failure to report fraud within 60 days of receiving your statement, the FTC says that you could lose “all the money taken out of your ATM/debit card account, as well as money in accounts linked to your debit card.

2. Rewards aren’t available to you

Shopping online with a debit card puts you at risk for fraud as well as missing out on plenty of other benefits. When you make the same purchases with a rewards or travel credit card, you could earn cash back or travel rewards. You can use these rewards to see the world or spend on gifts, merchandise, and more.

A rewards or travel credit card typically earns 1% to 3% back, but you can also earn double rewards if you shop through an airline portal, cash back program, or travel rewards program. Debit cards are also accepted in some portals, but earning airline miles or cash back is more limited. 

3. Sign-up bonuses are not available

Debit cards don’t allow you to earn big sign-up bonuses when you shop online. When consumers meet minimum spending requirements within a few months, they can earn bonuses worth $500 or more on rewards credit cards.

You don’t have to pay an annual fee on a credit card to earn sign-up bonuses and rewards. Many rewards credit cards offer hefty bonuses, ongoing rewards, and more without charging annual fees. 

4. There’s a loss of valuable consumer protections

You may also qualify for valuable consumer protections and free insurance if you use credit instead of debit. It can include trip cancellation and interruption insurance, rental car insurance, travel accident insurance, luggage delay insurance, and others. 

You can also get extended warranties, purchase protection, and guaranteed returns when you buy online. Using a debit card for online purchases will usually not qualify you for any of these perks. 

5. Your credit history isn’t being built

Finally, if you use your debit card for everyday purchases and online purchases, you are not building credit history. As opposed to debit cards, credit cards will have regular purchases and payments reported to Experian, Equifax, and TransUnion. 

It is important for your credit bureaus to report your credit usage and payments, as it proves your creditworthiness and provides them with the basis to increase your score over time. Your credit score won’t suffer from using a debit card, but it won’t improve either. 

Are you thinking about getting a credit card? A word of caution

Although debit cards are riskier and less rewarding online, you still need to determine whether you can use a credit card. The good thing about credit cards is that they offer better fraud protection, rewards, and valuable consumer protections, but they can also lead to overspending and debt. 

Using a credit card requires you to stay on budget and spend only what you can afford, which is why you need to be committed to spending only what you can afford. Credit cards with high interest rates may wind up leaving you in debt, which may negate any rewards and protections you receive.

Like this post? Try Is It Worth Paying Off My Debt Early? If you want a deeper dive, try You’re Not Broke, You’re pre-Rich.

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Sal Ashraf

I'm a freelance writer. This site is all about getting more business, and keeping that business, whether you're a solo entrepreneur, or a large company.

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