With our Credit Cards Pulled from Underneath Us, How Safe

With our Credit Cards Pulled from Underneath Us, How Safe are the Visa or Mastercard Debit Cards?

At a time when everyone's credit rating is taking a real beating, and people are having their credit cards yanked or having their limits cut to about $3.99, the humble old debit card suddenly looks not so dull after all. People just need to have a card for telephone or Internet purchases or just for plain convenience. In fact, in lots of cases around the country, debit card use is overtaking the credit card in many traditional areas. But they have their province: reasonable everyday purchases. For the large purchase, like a TV or a car payment, the credit card still rules. Paying by credit card does give you buyer protection under the Fair Credit Billing Act; if the store you made your purchase at palms off shoddy stuff on you, you can call your card company and stop payment, as simple as that; and this is something people really value. The Visa and MasterCard debit card brands also try to give you a part of the protection credit cards are known for: protection against theft. The law doesn't ask them to, they just do it out of appreciation for your rights as a consumer (the day I believe that...).

The MasterCard debit card is a special exception to the theft rule. They only cover you for two such instances in the year. Past that, you're on your own. Visa and MasterCard are even moving to square up the differences between debit and credit cards in other ways. It used to be that retailers would give you store credit only when you went crying to them - same as for cash. But the zero liability rule everyone loves on credit cards, is being carried over to debit cards too. It's easy to look at the shiny and familiar MasterCard debit card logo, and feel that what you have is practically a credit card. That is not really so; with a PIN-based debit card, we just don't have all the same consumer friendly policies on our side. The shops you go to do not always use MasterCard's own network to process your purchase; when they use the bank's network, you end up getting zero protection.

But the whole situation with how liable you are for a purchase gone awry, is always kind of up in the air for debit cards. It never seems as ironclad as with a credit card. When your debit card is swiped for a purchase, then suck it out of your account right away; you need time to realize how something isn't quite right with your purchase; by then your money's long gone already. Mastercard debit card policies say that you're supposed to approach the shop yourself in the event of a problem, and try to work it out. And accept store credit if that's what is on offer. They only want you to contact them if nothing else works out. Such protection does exist, but if you dally about reporting it to them, you might find yourself liable for about $500. If you take longer than two months to report anything, they turn their backs on you.

As happy as people are hanging on to their Visa or MasterCard debit card for now, they could re-think it in the future. There is just no temporary free credit anymore. You buy, you pay immediately. The problem is, you do get credit of a different kind. They call it an overdraft. And they don't even tell you that you are overdrawn. If you overdraw by so much as a dollar, a month later, you get a $100 bill for the interest. The consumer rights people are finding that one now. One does hope that the good old times return and credit cards are dropped over us like confetti again.