What’s Safer: Debit Cards, Credit Cards, or Apple Pay?

Credit Card vs Debit Card Safety

I have this pseudo embarrassing habit. When it’s my turn to checkout at the store, I give the POS card reader a firm jiggle before inserting my card—particularly the shield that would hide my PIN entry. 

You see, a few years ago, I wrote my first piece on ATM skimming. It awoke me to a risk I hadn’t even known existed.

Crafty fraudsters can construct plastic parts that look like they belong on an ATM or POS machine. Like a shield for PIN entry. They can then insert a tiny camera that can watch you key in your PIN as it grabs your account number off your card.

All of this information can be transmitted to the thief remotely, giving them access to everything they need to run you dry.

Often, if you jiggle the shields or any other part of an ATM or POS interface that looks like it could have been built on later, you can very quickly tell if it was part of the manufacturer’s original design.

Pieces created by skimmers often have to be extremely easy to attach and detach so they do not draw attention to themselves at the time of installation.

If you don’t want to be that weirdo jiggling the POS machine as eyes roll in the line behind you, what can you do to protect yourself? Are certain methods of payment more secure than others? The short answer is yes, but let’s get into the longer answer. 

Because that’s far more interesting. 

How safe is using my debit card?

Technically, all but the first $50 of fraudulent charges is protected when a skimmer uses your debit card number to make a purchase under Federal law. However, you have the catch the error within 60 days of your bank or credit card issuing the statement containing the fraud. If you don’t and the fraud continues past this point, you could be held responsible for all charges—even the fraudulent ones–made after that 60-day point. 

From here, your financial institution has ten business days to investigate, and then one additional day in which to credit you back your money. 

If its investigation is inconclusive and more time is needed for completion, your account must still be credited to the full amount you claim was stolen. You may be credited your claim minus $50, which is standard and allowed under federal law. 

The financial institution has 45 days to figure everything out—including a reimbursement of your money if they find the charge was, indeed, fraudulent. If they determine it was a legitimate charge, they must notify you in writing. In these cases, you will have to pay the money back which was temporarily credited to you while the bank or credit union was investigating. 

Does that mean you’ll have to wait a full eleven business days for your initial credit and a full forty-five for the conclusion of the investigation?

No, says Edward Shepard, Marketing Lead at Tiller Money. When he found $3,500 of fraudulent charges thanks to debit card skimming, his bank credited him most of the money in a couple days, and all of it within a couple weeks, during which time it completed its investigation. 

“I was shocked when I looked at my bank balance and saw it was near zero, with dozens of transactions for concert tickets, video games and other items,” said Edward. “I immediately called TD Bank and let them know about the fraud. After a quick investigation, I had most of the money back much faster than expected.”

That’s not to say you’ll have the same experience. The amount of time it takes to refund your money can vary from bank to bank and credit union to credit union, but it must comply with the federal timelines we covered in this section at bare minimum.

How safe is using my credit card?

Fraudulent charges on a credit cards are covered by the Fair Credit Billing Act. This law says that you cannot be held responsible for disputed charges, though they may still show up on your credit card statement.

Your credit card provider cannot report you to crediting bureaus and cannot charge you late fees or additional financing charges on the disputed portion of your bill, and must credit them back if they do. You will still be responsible for any undisputed portion of your bill, though. 

The FTC recommends submitting your complaint about fraudulent charges in writing via certified mail. The creditor then has 60 days to get everything sorted. Technically, they are not required to credit you with the first $50 even if the charge is found to be fraudulent, but most credit card companies choose to reduce this liability down to $0 and give you all the money back. 

While the rules for fraudulent charges on debit and credit cards are similar, many would rather have their credit card information skimmed. That’s because while it can potentially inconvenience you by tying up some of your credit, the dispute and investigation won’t actually be tying up the cold, hard cash you need to pay the bills.

Most of the time, a charge against your credit line is more desirable than trying to recover the actual money brought in via a paycheck or any other income source.

How safe is Apple Pay?

If you’re worried about fraudsters skimming your account information, Apple Pay is one of the safest ways to go. There’s a caveat, though. While Apple Pay can give you some level of protection from getting your information skimmed, it’s also a helpful tool for fraudsters who have already skimmed information.

There is a documented history of those who purchase or obtain skimmed or otherwise stolen credit and debit card numbers loading the stolen information onto an Apple Pay account. Now, not only can they make purchases online, but they can make purchases in person without physically having your card. 

The effects on you will the be the same as if they had skimmed your card information and used it directly. You will either have to work with your bank, credit union or credit card issuer in order to get your funds back.

Paying via Apple Pay is still comparatively safe. You just have to hope that no one else is using the same tool to do something illegal with your private banking information.

What’s the best payment method to avoid card skimming?

If you’re trying to avoid skimming in the first place, tools like Apple Pay can be useful. Credit and debit cards have similar, though slightly different rules about refunding your money in the case of fraud.

Many people feel safer using a credit card when making in-person purchases as if their information is skimmed, it’s not their cash that’s in danger; it’s just their credit.

That said, if you use a debit card, there’s no guarantee that you’ll be waiting forever to see your money back. You could have an experience like Shepard’s, where enough of your money is refunded in a couple days to put your mind at ease. 

You’ll also need to take into consideration your own behavioral spending habits. Yes, maybe getting your credit card number skimmed is more convenient than getting your debit card number skimmed.

But can you handle credit? Is the thousands of dollars of legitimate debt you could potentially end up putting yourself in worth the risk avoidance? 

Or maybe you make do with a low or fixed income. In these situations, even waiting a couple days for your money to be refunded could be the difference between paying rent or having enough money in your account to clear that autopay for your electric bill.

In these cases, it might make sense to be extra guarded with your cash if you are able to obtain access to credit.

The best method for you is going to be unique to your personal risk tolerance, behavioral personal finance habits and potentially even income. Whichever method you end up going with, don’t be afraid to give that PIN shield a jiggle at checkout.

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