So … you want to swipe your debit card for that purchase?
Money expert Clark Howard has — for many years — warned consumers about the dangers of using a debit card for daily spending.
His concerns are primarily tied to the flimsy consumer protections you receive if a bad actor gains control of your debit card versus the more sturdy protections you’d get by using a credit card.
And, if a bad actor gains control of your debit card, that puts real cash in your checking account at risk. This can create a cascading effect of bounced checks, insufficient funds on bill payments, and more potential cash flow problems while you sort this out with your bank’s fraud department.
A similar theft of your credit card would only expose your line of credit with that card issuer until things get squared away. Most credit cards offer a “zero liability” policy for fraudulent charges.
This, along with the potential to earn cash back rewards, is why Team Clark believes using a credit card for your everyday spending is a better idea. This is provided that you are able to pay your bill in full each month to avoid interest charges.
However, we still often get questions about whether there are exceptions to that advice. And we do have some.
In this article, I’ll walk you through the two simple safety precautions you should take if you’re planning to use a debit card for more than getting money out of an ATM.
Precautions to Take Before Using Your Debit Card to Pay
As mentioned above, Clark strongly prefers that you avoid using your debit card for purchases in most scenarios.
But sometimes life presents scenarios in which using a credit card just isn’t feasible and using cash isn’t an option.
For example, some merchants have started charging convenience fees for swiping credit cards. These fees may have you considering swiping a debit card at the point of sale or using it to pay an online bill.
If you do, we advise taking these precautions to protect your cash.
1. Set Up a Separate Checking Account for Debit Card Purchases
If you’re planning to spend with a debit card, we suggest taking the extra step of setting up a separate free checking account to fund these purchases.
This way you can separate the bulk of your funds from your “spending money” to avoid a situation where someone gets your debit card and goes on a spending spree with your funds.
Limiting the balance of the checking account attached to your debit card will leave the thief with very little to spend before they run out of funds, and it will keep the rest of your cash safe and secure in an unattached bank account.
Clark also uses this “extra checking account” method for safely moving funds when his family is required to use payment apps like Venmo for various transactions.
2. Use a Mobile Wallet Instead of Swiping (Whenever Possible)
If you’re going to pay with a debit card, we recommend loading it into your Apple Pay, Google Wallet or Samsung Pay wallets on your mobile device and using the tap-to-pay payment option whenever possible.
These systems use tokenization, so merchants receive encrypted payment credentials instead of your actual debit card number.
Clark says this is a much safer way to pay than using your physical debit card.
Bottom Line
Debit cards do not have the same consumer protections offered by credit cards. And choosing “credit” when processing a debit card transaction won’t change that.
So, the safest way to complete a debit card transaction is using the tips we provided above to achieve the following:
Protect your primary bank account balance by setting up a separate checking account for debit card transactions.
Fund that account with only enough money to cover your planned purchases.
Add that debit card to Apple Pay, Google Wallet or Samsung Pay and use tap-to-pay whenever it’s available instead of swiping or inserting your physical card.
Do you have tips for safe debit card usage? Have an experience you’d like to share? We’d love to hear about it in the Clark.com community.
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