Debit vs. credit: Which offers more protection?


To Her Credit 
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). 

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Question for the expert

Dear To Her Credit,
Someone told me never to use a debit card because I don't get any consumer protection that way. If I buy a DVD player or something online with a credit card and it quits working, or if it doesn't come in the mail at all, the credit card company will be on my side, but with a debit card, I'm on my own. Is that true? -- Claudia

 Question for the expert

Dear Claudia,
Conventional wisdom says that credit cards give you more consumer protection than debit cards. Conventional wisdom isn't always up to date, however.  

According to Dennis Simmons, accredited ACH professional and president and CEO of SWACHA (a trade association representing businesses and electronic payment systems), credit cards and debit cards fall under different sets of laws. Debit cards fall under Regulation E -- the Electronic Funds Transfer Act -- which was written when debit cards were mostly used for ATM transactions.

Those rules became insufficient when people started using debit cards for more consumer purchases. Simmons says, "Regulations E and Z establish minimum standards. There was a desire to bring debit cards into the world of credit cards, so credit card company associations made their own rules."

In an effort to make consumers feel comfortable using debit cards, more and more companies are extending the same consumer protections to cardholders regardless of whether they use their debit cards or credit cards.

Here's how to get the best consumer protection for your money using debit or credit cards:

  • Use a branded cards, such as Visa, MasterCard, or American Express.
  • Know the rules. The fine print in your cardholder agreement tells you about your rights. You can also check out the websites for American Express, MasterCard and Visa.
  • Don't buy extended warranties that overlap the protection offered by your bank. Tracy Piercy, certified financial planner professional and founder and CEO of, says, "Some credit card companies promote that in their marketing." Don't pay for protection you already have.
  • Resolve issues as soon as possible. Say you buy something through the mail and it never arrives. If you use a debit card, the money comes out of your account immediately; if you used a credit card, the amount was added to your account balance. Either way, if you cannot resolve the problem with the company you bought the merchandise from, you should immediately contact your debit or credit card company.

Now that debit and credit cards both work nearly everywhere, why does anyone use a debit card? Simmons says if something costs $100 or less, he uses a debit card; if it's more than $100, he uses a credit card so he gets the rewards. He and his wife use a debit card as kind of a restraint and cash management tool. Using a debit card is "pay as you go" -- you're not spending next month's paycheck today.

If your bank gives you equal protection whether you use a debit or a credit card, you may still prefer to use a credit card for two reasons: Credit cards generally offer better rewards, and if there is a problem, you don't have to pay until it is resolved. With a debit card, the money has left your account. (Simmons says, however, that in the case of a billing error, for instance if you are double-charged, the bank must credit your account immediately even with a debit card.)

Make your decision to use credit or debit cards based on your money management habits and the system that works for you. If you know your rights -- the ones in the fine print in your cardholder agreement -- you can make sure you have consumer protection whether you use debit or credit cards.

Sally Herigstad writes about women and credit every week for Herigstad is a writer and finance consultant for MSN Money, a personal finance software product. She is also a member of the Washington Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Her website is http://helpicantpaymy Sally Herigstad lives in Kent, Wash., with her husband Gary. They have two grown children, Valia and Grant.

To Her Credit answers a question about a debt or credit issue from a reader each week.
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Updated: 01-19-2018