5 Reasons Credit Cards Are the Most Secure Way to Pay
by Lyle Daly | Jan. 7, 2019
No one wants to lose money or be a victim of fraud. Here’s why credit cards are the payment method that will keep you the safest.
Some of the advantages credit cards have over debit cards and cash as a payment method are obvious. The best credit cards can earn you quite a bit back in rewards. They’ll also help you build your credit. What consumers often don’t realize, though, is that credit cards are also the most secure payment method you can find.
Considering how rampant fraud is and that a new major data breach is announced seemingly every few months, security is more important than ever. When you’re picking your primary payment method, there are several key reasons why a credit card is the smartest choice.
1. They’re not connected to your money
Since credit cards aren’t linked to your bank account, they provide an extra layer of security. When your credit card is used, it’s the card issuer that’s paying for the transaction, at least until you pay the bill.
If you were to lose your wallet, you wouldn’t need to worry about someone draining your bank account, like they could with your debit card. You’ll just need to contact your card issuer to get a replacement credit card.
2. You have limited to zero liability for fraudulent charges
Fraudulent charges are a hassle, but at least with a credit card, there are consumer protections that will limit your liability. Here’s what the Fair Credit Billing Act stipulates regarding credit card fraud:
- If you still have the card and someone stole your card number, you’re not liable for any fraudulent transactions.
- If your credit card was lost or stolen and used before you notified your card issuer, you’re liable for up to $50 of fraudulent transactions. However, most card issuers have zero-liability policies and won’t require you to pay anything.
With a lost or stolen debit card, you’d be liable for up to $50 in fraudulent transactions if you report it within two days, up to $500 if you report it within 60 days of the statement with those charges being sent to you, or an unlimited amount for any notifications later than that.
And even though your bank will be refunding you for some or all of the fraudulent charges, you’ll be out that money until they’ve investigated.
3. Fraud alerts notify you if your card is compromised
Card issuers now let you provide your phone number to register for fraud alerts. Once your card issuer has your phone number on file and your consent to receive texts, they will send you a message for any suspicious transactions, such as larger-than-usual purchases.
These alerts can be a big help if your credit card number is compromised and you don’t realize. Instead of having someone else use your credit card without your knowledge for days or weeks, you’ll know right away and can cancel the card.
4. Your card issuer will freeze disputed transactions
Whether you’re disputing a transaction because it’s fraudulent or due to an issue with the product or service, the dispute process will be more convenient for you with a credit card. It goes back to how your credit card isn’t linked to your money.
While you dispute a credit card transaction, your card issuer freezes it, meaning you don’t need to pay for it until the dispute is over. If your card issuer rules in your favor on your dispute, then you don’t need to pay for the transaction at all.
With a debit card dispute, the money would already be gone from your bank account. If your card issuer rules in your favor, then they’ll do a chargeback to get your money back from the merchant, but that means you won’t have that money throughout the dispute process.
5. Chip technology makes it harder to steal your credit card data
By now, all the major card issuers in the United States have moved on to chip cards. That’s good news from a security standpoint, because the difference between magnetic strip and chip technology is like comparing an unlocked front door to a bank vault.
The sophisticated encryption of chip cards helps prevent counterfeiters from stealing card information during point-of-sale transactions. In particular, the inexpensive credit card skimmers that counterfeiters would use to steal credit card information aren’t effective for chip transactions.
Keeping your finances safe
When you consider how much safer and more convenient it is to pay by credit card, it makes sense to use one as your primary payment method. Carry a little cash if you think you’ll need it, but otherwise, carrying only a credit card puts you at a much lower risk than carrying a wad of cash or a debit card everywhere you go.
Our credit card expert uses the card we reveal below, and it could earn you $1,148 (seriously)
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
About the Author
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.