Debit cards are very similar to cash, in that transactions are instant. When you check out is basically when the money leaves your bank account.
Using a debit card can also be risky. They don’t offer much financial protection and are more attractive to thieves in certain situations.
For these and other reasons, sometimes you’re better off offering to use a credit card or cash. Here are some great examples.
1. Purchase online
It’s safer to pay with a credit card when shopping online, according to the US Federal Trade Commission (FTC).
If cyber criminals intercept your debit card number, they can drain your account immediately.
Credit cards come with more protection. For example, as we explain in “7 Ways to Protect Your Wallet — and Identity — When Shopping Online,” credit card transactions are protected under the Fair Credit Billing Act:
“This federal law gives you certain consumer protections, such as the ability to dispute billing errors and withhold payments while your creditor investigates disputed charges. Perhaps more importantly, the law generally limits your liability for unauthorized credit card charges to $50.”
Gas stations can be hot spots for criminal activity. According to Visa, about 1.3% of payment fraud in the US occurs at fuel pumps.
The FTC has warned travelers against using card skimmers at gas stations. Skimmers are illegal card readers that criminals can attach to payment terminals. Fuel pump payment terminals are an attractive target because they are not manned by employees.
The FTC explains:
“These card readers retrieve data from the magnetic stripe of credit or debit cards without your knowledge. Criminals sell the stolen data or use it to buy goods online. You won’t know your information has been stolen until you get an overdraft statement or notice.
While not a completely risk-free option, a credit card is safer for buying gas.
If you must use a debit card, the FTC recommends running it as a credit card. When you use a debit card as a credit card, you don’t need to enter a PIN — which helps keep your PIN secure — and the money won’t be deducted directly from your bank account.
3. Eat out
Leave your debit card out of sight for a few minutes, and it could fall into the wrong hands — or in a card skimmer.
Try to use cash or credit cards when dining out – unless your waiter brings a handheld payment system to the table so your plastic is never out of your sight.
4. Hotel reservation
In order to secure your room reservation and cover incidental charges, the hotel will put a hold on your payment card. If you give the hotel a debit card, it will effectively take the amount of the hold from your bank account, according to Frommer’s.
Funds will be returned after you check out. But it may take your bank a few days to process the request, meaning you won’t be able to access the funds for a few days after your stay at the hotel.
Avoid the headache and book the hotel with a credit card. Be careful not to exceed your credit limit when a hold is on your credit card.
5. Car rental
If you don’t have a credit card, renting a car will likely cost you more than the daily fee. Some Hertz locations, for example, perform credit checks on many customers who rent with debit cards, according to their website. It can hurt your credit score.
Some car rental companies may also hold your debit card.
6. Other rental goods
When planning an event — such as a wedding or a child’s birthday party — use a credit card to rent tables, tents, and bounce houses.
Party rental companies often ask for a deposit. So, showing a debit card means that the deposit amount will be taken directly from your bank account.
The same goes for renting trucks and tools at a home improvement store.
7. Expensive things
Have you ever sent in new furniture, only to find the corners dirty or the upholstery stained?
If you paid by credit card, you can dispute the charge and get your money back. Again, the Fair Credit Billing Act gives you the ability to dispute credit card transactions and withhold payments while your credit card company investigates.
Unfortunately, it is not the same as a debit card transaction. Plus, the money will be long gone from your bank account before you even notice the damage to the furniture.
8. Automatic subscriptions and purchases
In an era of food delivery services, automated delivery programs, and electronic toll tickets, it may be tempting to set it and forget it.
You simply put your debit card on file, and the company automatically bills you on a recurring basis. But if you don’t factor these expenses into your monthly budget, your bank account may suffer a loss.
To avoid overdraft fees, use your credit card for automatic recurring charges.
9. Withdraw cash at Mandiri ATMs
Withdrawing cash at Mandiri ATMs can harm your debit card. These machines are less likely to be monitored than ATMs in banks, which means fraudsters can compromise them more easily.
So if you want to get cash to buy dinner, use an ATM at a physical bank.