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.

Should You Sell Or Repair Your Old Car?

Before you splash out on a new car, consider these factors when deciding whether to fix up your old car or get a new one.

Ensure that your car is of the right age and is safe

Your decision to repair or replace a vehicle that was built in the early-to-mid 1990s should take safety into account. In the past 20 years, safety standards have changed a great deal, and switching to a newer model could make a big difference if you were to suffer an accident. This is especially true for families who use older cars. With new cars, it’s much easier to properly install car seats, for example, which can make parents’ lives much easier. 

Consider rust as a serious issue

Taking care of surface rust on the frame of your car doesn’t necessarily mean that it will become a problem, but your mechanic will let you know if it has rusted to such a degree that driving the car has become dangerous.

Find an online forum for your make and model

Forums can actually save you money. Find one that covers your vehicle and you can ask questions of people who own one like yours or have owned one in the past. Ask questions about your specific repair. There is a good chance that someone else has experienced the same issue on the same car, and they will be able to tell you exactly how much more driving time they were able to get, thanks to the repair.

Some cars have known issues that crop up as they age, and you can also check out the forums to see if you have any of those problems with your specific car. If you bought your car used, you may not be aware of recalls or other issues, so you should check these forums out. 

Analyze cost versus value

Is the cost of a repair worth it to you? Simple subtraction simplifies the decision for insurers. Insurers will total a vehicle if the repair costs exceed Kelley Blue Book value. You may find this simple equation helpful if you are considering buying a new car.

The value of a car may not be as straightforward as this. You will have a harder time deciding whether the repair is justified if you own your current car free-and-clear and cannot afford a car payment. It’s a good idea to buy a new car if the repairs would require more than a year’s worth of car payments – but to keep the old one if it’s cheaper.

If your old car needs repairs, you might be able to trade it in for a nicer one. You may have to work harder to sell or trade in a car in need of major repairs, but it may be worth something and will help you buy something newer or more reliable.

So, sell or repair?

It is impossible to tell for sure if you have made the right decision when making a decision such as this regarding repair or replacement. However, in order to decide whether it is better for you to repair your car or to buy a new one, you must collect as much information as possible about your car’s safety, its common problems, and its value.

I hope this helped. If it did, consider other posts like Is it worth paying off my debt early? And if you want to find out more about buying a car, try How to buy a car.