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Debit cards take over online – but are you at risk?

A credit card close up

Barely a week goes by where I don’t order something online using my debit card. But am I putting myself at risk by using my debit card instead of a credit card?

Online spending using debit cards has hit £35bn in the UK, according to the UK Cards Association. In fact, debit card spending overtook credit card spending online for the first time last year, by more than £1bn.

It makes sense that debit card transactions are taking over online, particularly when you consider that 91% of the UK population have debit cards while only 61% have credit cards. Personally, I prefer to use my debit card because it takes the money straight from my bank account, helping me to budget from day-to-day. When we talked about cash vs plastic, Melanie explained why she uses her credit card:

‘I tend to use credit cards for just about everything because of the rewards, convenience and security. […] There is one main consideration to always keep in mind: if you use a credit card for a purchase, will you pay off your balance in full each month?’

A growing sense of security

The increase in debit card use online suggests that people are starting to become more comfortable putting their payment details into websites. But does it actually make a difference what type of cards we use to make our purchases, online or offline? Well, as it happens, it can make a difference to your rights as a consumer.

When it comes down to it, you’re afforded a little more protection if you use your credit card to shop online instead of a debit card. For example, if you bought something from a business which then folded before sending you the item, you should be able to claim the money back from your credit card issuer under Section 75 of the Consumer Credit Act 1974. However, this only applies if the item costs between £100 and £30,000.

That doesn’t mean there isn’t any protection at all for debit card users. If you found yourself in the same situation but had paid by debit card, you may be able to claim the money back using Chargeback. There’s no minimum limit on how much you have to have spent, but you will have to register your claim within 120 days of discovering the issue. However, there’s no guarantee that the Chargeback will be successful as it depends on whether there’s money there to be clawed back.

How to shop safely online

If you’re worried about using your payment cards online, you can run a few simple checks to make sure the site is safe. For example, check for a padlock sign in the browser window, which indicates the site is secure. You should keep all of your passwords for extra verification safe and secure, and always log out of a website after making a purchase. Finally, make sure you regularly check your statements for unexpected debits.

I use my debit card to make online purchases, but I do try to stick to well-known brands I know I can trust. Do you use your debit card to make purchases online, or have you stuck with a credit card? Or do you avoid making purchases online altogether?

What type of card do you use to shop online?

Credit card (45%, 552 Votes)

Debit card (21%, 260 Votes)

Either debit or credit card (20%, 244 Votes)

Online payment services eg Paypal (12%, 146 Votes)

I don't shop online (3%, 39 Votes)

Total Voters: 1,240

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Comments
Member

I pay my credit card off each month so use it whenever possible for purchases – omline and offline. I don’t see the point in using a debit card unless there is a charge for a credit card – I get a month’s interest free credit, protection, reward points and just have to budget to pay off the card once a month. But I do keep track of purchases (Microsoft Money) to ensure I know what I am spending.

Member

Why would one want to buy something with a debit card instead of a credit card when the transaction amount would be the same? It doesn’t make sense financially. With a debit card, you pay 100% of the transaction amount; with a credit card, you pay only 99% or even less, depending on whether you receive cashback, airmiles, points or something else from the card issuer.

For transactions that go wrong, the protection offered by a credit card is significantly higher than with a debit card. One of the most obvious advantages is consequential losses. If you bought an airline ticket for £500 months before the flight, but the airline went bust only days before the flight when competitors were charging £2000, you could claim £2000 from a credit card issuer (under Section 75), but only the original £500 from a debit card issuer.

Nevertheless I’m happy that so many people use debit cards, because they are subsidising the costs of the same retailers accepting my credit card payments without any surcharge. Continue if you wish!

Member

I normally pay by credit card unless there is a surcharge, in which case I use a debit card, online payment, cheque – or cash for small amounts.

Member

Agreed. Two rules:
1. Pay with a credit card only if it costs the same as other forms of payment (or if the surcharge is less than the cashback or other rewards).
2. Always pay the balance in full every month. Use it as a means of payment, not as a means of borrowing.

Member

I strongly advise paying credit card bills in full by Direct Debit if you can afford to do this. If not, there might be cheaper ways of borrowing money.

Member

I prefer to pay my credit card bill online with a debit card – just keeps control over the payment. It is important to keep your credit card receipts and check your statement is correct – mistakes do happen – including fraudulent transactions.

Member

I do this and every debit I have queried has turned out to be genuine.

Member

Hi NFH, personally – I prefer to pay by debit card because it helps me to budget. The money comes straight out of my account so I know it’s gone, and I don’t end up owing the money to my credit card four weeks later once I’ve forgotten about the purchase.

However, the points you raise around the benefits and security of shopping with a credit card are absolutely valid, so I think it may be time to change my ways.