Why You Should Never Own a Debit Card
We're serious about this: you should never own a debit card because debit cards are not credit cards, just as credit cards are not money. Tweet
Debit cards look like credit cards...
...but they're not. They're worse. You avoid compiling debt...
...but at the cost of consumer protection.
Don’t carry a debit card in your wallet.
Don’t keep in a debit card in a safe at your house.
If your bank sends you a debit card out of the blue, call them and cancel it immediately…and note the date and time of your call.
Debit cards are not credit cards…they offer you little or no protection.
We’re serious about this. Because debit cards are not credit cards, and unlike credit cards, they offer you little or no protection if they are compromised. It’s like bareback spending.
Or to say it another way:
If your credit card is compromised, you are liable for up to $50 in charges. But if your debit card is compromised, you could lose every dollar in your account whether that’s $500 or $5,000 or $50,000. Or, in my case, $7.23.
But don’t take our word for it; you can see what consumer advocate Clark Howard has to say about debit cards here.
Instead of using a debit card, here’s a better plan:
- When you want to buy something, use a credit card instead of a debit card; and make sure you are using a credit card that gives you miles or points or cash back and then pay the credit card balance off every month. If you’re shopping for a card that gives miles, points or cash back, we can help; just go here.
- Open a separate bank account just for cash withdrawals, and tell your bank you do not want a debit card, you want an ATM card instead. (ATM cards can only be used to withdraw cash, debit cards can be used to withdraw cash like an ATM card, but can also be used like a credit card to make purchases. You can easily tell an ATM card from a debit card; a debit card will have the Visa or Mastercard logo on it, an ATM card will not.)
- Use your bank’s online banking platform to schedule automatic transfers from your checking account to your new ATM account, so if someone hacks your ATM card they can only get a small amount of money.
- If your bank tells you they no longer offer ATM cards, go ahead and take the debit card but use a permanent marker to write “DEBIT CARD” across the front of the card to prevent you from mistakenly using the card to make purchases.