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14 Red Flags for Debit Card Use: When to Switch

Credit and debit cards might look similar but have different uses. Similarly, fraud protection is also different for both of them. Credit cards have much better security than debit cards. So, practically, using debit cards openly is quite risky. There are some instances and places where you may face debit card risks if you use it.

1. Online shopping

Do not shop online with a debit card. Your debit cards link directly to checking accounts. So there will be a chance of payment error or your debit card number might get stolen. Do not use your debit card to make payments on phone orders.

Insufficient balance in your debit card may also trigger fines and unnecessary charges. So, while doing online shopping, use credit cards instead of debit cards.

Unauthorized transactions or fraud are among the biggest challenges of using debit cards. Scammers can hack your card details and use it to withdraw cash without your permission. You must notify your bank or card issuer immediately about suspicious activities. You may even block your existing card and request a replacement card.

According to Niclas Schlopsna, Managing Consultant and CEO of Spectup, online shopping on unfamiliar or unsecured websites is particularly hazardous. Unlike secure and well-known e-commerce platforms, lesser-known or unsecured sites may lack robust security measures, making them hotspots for cybercriminals to steal card information.

Always look for signs of website security, such as HTTPS in the URL and a padlock icon, before entering your debit card details. For added safety, consider using credit cards or secure payment services like PayPal for online transactions, as they often provide better fraud protection.

2. Big, expensive purchases

You should use credit cards for big purchases. A credit card gives you the authority to dispute any fraudulent transactions. They often offer extended warranties and accident protection. Debit cards usually don't give you such an option.

Using a debit card for buying big, expensive items will reduce your account funds immediately. Instead, buy with a credit card and pay off the balance before the due date.

3. Requested deposit

When you get any item on rentals, the service provider may ask you for a large deposit. If you use a debit card for making that payment, you will directly reduce your bank account money. It is better to use a credit card in this situation and keep your checking account funds intact.

4. Found strange debit charges

Stop using your debit card immediately once you find any unknown charge. Debit card fraud is difficult to recover due to bank regulations and its lengthy recovery processes. Zach Robbins, CEO of Loanfolk, added - "From personal experience, it can take several weeks to receive a refund for fraudulent charges on a debit card, whereas credit card refunds are typically processed immediately."

5. You're a new customer

If you have just opened a checking account, do not use debit cards to make payments. For your first few in-store purchases, online purchases, or other bill payments, use credit cards or cash. Do not disclose your bank account information immediately. Wait for at least 6 months to start your debit card purchases.

6. Buy now, deliver later

Are you buying items now that you'll receive days or weeks later? For such payments, use credit cards instead of debit cards. As said earlier, credit cards have a limited protection period. So, if you have any issue regarding your purchase later, it will be resolved quickly. With debit cards, you won't have such an option.

7. Recurring payments

Do not use a debit card for making recurring payments. Cable subscriptions, gym memberships, or any other monthly membership fees may directly eat up your savings.

If you use debit cards for recurring expenses, it will be difficult to remember and calculate every expense. While creating a household budget, you might forget about an automated bill payment one month. As a result, you might create an overdraft balance and cost penalty charges.

8. Future trip

Don't use your debit card to pay for future travel bookings. If you do so, you'll pay directly for the service you didn't receive yet. For example - you have booked a trip to Paris 6 months before your journey. You paid all expenses promptly because you might be getting good discounts on hotels and other services, if you book in advance. That's alright, and you did right! But using your debit card to pay off all the charges might be too risky and inconvenient.

For some unavoidable reasons (like health issues or weather issues), if your trip gets canceled, then you'll have a big loss on your bank funds that you have already invested. Canceling charges will be ripped off as soon as you cancel your tickets or hotel booking. Apart from that, if you use debit cards, you'll have to pay a big amount immediately.

But, if you consider credit cards for booking your costly trip, you may pay off the balance at your convenience over time.

9. Restaurants

When you visit an expensive restaurant, you usually use your cards to make bill payments instead of cash. Once you hand over your debit card to the server, there is a chance that some scammer may use a portable reader and hack your card details. Once the payment is made and the card returned to you, you can't imagine what has happened. And soon, you might find all of your funds are gone!

It is correct that credit cards are also used for identity theft. But you have to admit that credit cards offer more protection against illegal transactions than debit cards. With a hacked debit card, the scammers can withdraw all the money directly from your bank account.

If you notice any unwanted charges or an amount that shouldn't be there, report them to the bank. Small differences are ok. But frequent fishy transactions are a sure indication of potential debit card fraud.

If you still need to use debit cards in a restaurant, ask the restaurant authority or the staff to bring the card reader to you. Don't leave your debit card unattended anywhere.

If you're planning to make purchases with a debit card, you should watch out for skimmers that can steal the information from your card so it can be used to make unauthorized purchases. Eric Novinson, Founder of This Is Accounting Automation believes “it's riskier to use a debit card to make purchases from terminals that are located outside of stores rather than inside stores because of skimmers”

10. Hotels using holds

Using debit cards in hotels may create problems. Some hotels will hold your card for unexpected additional charges that don't appear on your statement immediately. They may even ask for deposits in advance to cover such expenses. These deposits or holds may cost you hundreds of dollars.

The reason for such activity is to ensure you pay for additional expenses that you may not have estimated earlier. For example, you might finish off all the stuff in your hotel room minibar and haven't added that cost to your total estimation.

Using credit cards for such holds is wise. Do not use a debit card for holds, as you might have limited funds in your account. It is better if you ask the hotel management about their policies regarding holds and deposits.

11. Places without security cameras

It is unsafe to use a debit card in a place where there are no security cameras. Without cameras, you won't have any proof against any possible consumer fraud. Without sufficient evidence, you can't report that crime.

Yoana Wong, Co-Founder of Secret Florists, elaborated - "Imagine a small convenience store that lacks security cameras. If a customer's card information is compromised during a transaction, there would be no evidence to track the perpetrator or resolve the issue". This lack of surveillance increases the risk of fraudulent activities. So, using your debit card there is strictly NO NO!

12. Gas stations using holds

Some gas stations also do hold. During gas price hikes, some gas stations temporarily hold for $50 to $100 for $10 in gas. But that's not very common practice.

Joe Chappius, Financial Planner, Tax Climate advised to stay alert in gas stations on making debit card transactions. These places are like magnets for skimming devices. Scammers can sneakily get all your debit card information.

So, to be on the safer side, using credit cards at the gas station will be wise. This can add an extra layer of security and keep your hard-earned money safe.

13. Famous tourist spots

Popular tourist spots may become a primary target for skimming activities. Scammers usually set up traps for travelers to steal their personal data. Using debit cards in tourist places can only increase the risk. So, do not use a debit card; instead, use your credit cards. This way, you can reduce the chances of fraud. Apart from that benefit, credit cards may also help you avoid international transaction charges.

If you still need to use your debit card, make sure no one is around. Cover the view while putting your PIN. And check if you are successfully logged out, before leaving the ATM.

14. Pop-ups and festivals

The BBB alerted consumers of a growing scam, popularly named summer festival ticket scams in June 2023. Scammers are selling fake festival, fair, and athletic event tickets and gatherings. card details.

It is not possible for you to verify these scams at first glance. So, without using your debit card, use your credit card. Credit cards allow you to dispute charges immediately. So, the BBB advises people to use credit cards as much as possible. This way, you can avoid possible ticketing fraud. Apart from that, while shopping, avoid Craigslist, Facebook Marketplace, and other free ticket listings.

Will you be responsible for any unauthorized debit card spending?

As per federal law, you will be charged only $50 for fraudulent debit card spending. But you must file a report about the fraud within two business days. If you file it after two business days but less than 60 calendar days, you may have to pay up to $500. If you don't report the fraud within 60 days of getting your statement, you will be responsible for the stolen money.

Check your bank statements regularly. If you find any error or fraudulent activity, report it immediately. Many banks provide debit card notification services. So, sign up for your debit card activity alerts. Through online banking services, you should review your statements regularly.

What to do if you identify a debit card fraud

There are a few steps you should take:

  • Lock your debit card if you suspect any fraudulent activity. You may use your mobile banking app or call your bank or credit union directly to freeze your card.
  • According to the Electronic Funds Transfer Act, you won't be responsible for fraudulent debit card transactions. But, as mentioned earlier, you must report debit card fraud within two days. Contact your bank immediately if you observe suspicious activity or unauthorized transactions.
  • Finally, notify the FTC about the fraud. The police will use consumer data to prosecute scammers and take steps to prevent new ones.


You might be making all your payments through secure payment methods. But you may still face fraud risks. So, the best option is to stop using your debit card everywhere. It will be better if you do not use it at all.

Being cautious is always a wise decision. So, you must review your checking account statements every week. Track your debit card transactions. If you find any fishy transaction, report it immediately. Do not ignore phone alerts from your banking app. Keep yourself updated with your bank and credit union's contact details.

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