Living in Frisco, Texas, Christopher Fess is a financial advisor working at Fess Financial + Life & Legacy Financial. Voted a Five Star Investment Advisor by the Texas Monthly Magazine every year since 2010, Christopher Fess publishes a monthly newsletter educating Americans on financial issues such as their use of credit and debit cards.
Debit and credit cards are American staples. According to the Federal Reserve, Americans use debit cards far more often, setting aside credit cards for big-ticket purchases. For instance, the average debit card transaction in 2018 was valued at $36 while for credit cards was $89. This data reveals that Americans use debit cards for their everyday expenses and then splurge with their credit cards. Beyond price, however, there are other factors that Americans should consider before using one card over the other, starting with fraud protection.
With credit cards, users are liable for a maximum of $50 in fraudulent card charges. With debit cards, that $50 limit holds only with lost cards or forgotten PINs reported within two days. If reported within 60 days, the applicable limit is $500. After 60 days, users face unlimited liability.
Credit cards, therefore, are more ideal for scenarios where users sense a higher degree of risk such as when they are buying from online vendors and when they have to leave sight of their cards. For consumers who still prefer to use their debit cards in these scenarios, it would be wise of them to lower their checking balance. In addition, users can dispute their credit card bills before paying their monthly bills. Disputing debit card charges is more difficult since the money has already been cut from the checking account balance.
Ultimately, the advantages brought on by credit cards only hold if users pay their monthly bills on time. If they do not, they risk incurring high-interest charges and compromising their credit scores.
Christopher Fess 