Credit Cards vs. Debit Cards – What’s the Difference?

There’s a popular TV commercial that ends with the line, “What’s in your wallet?” Of course, the ad is referring to the credit card it’s promoting.difference-between-credit-cards-vs-debit-cards

But for many consumers, what’s in their wallets is usually a mix of credit cards and debit cards. So, how do they pick which one to use? Is there really any difference between a credit card and a debit card? You bet there is.

To get a better understanding of how the cards differ, here’s a glimpse at some of the benefits associated with using credit cards:

And using a debit card has its advantages as well:

  • Debit cards can help keep you out of debt. That’s because the cards are linked directly to your bank account, unlike a credit card where you’re essentially borrowing the money. So, as long as you keep a close eye on how much money you have in your bank account to avoid accidental overdrafts, you’ll only spend the money you have and avoid costly fees. With a credit card, it’s easy to rack up interest fees on the money you’re borrowing, unless you pay back the full card balance each month. Paying with a debit card can also help you avoid other common credit card charges like late payment fees and annual fees.
  • With a debit card, you don’t have to worry about paying yet another monthly bill. But be sure to always keep an eye on your account activity and statements. Doing so will help you to spot any suspicious charges early on, and can also prevent you from overdrawing your account. Reviewing your bank account activity is easier than ever now that most banks offer online banking and mobile banking to their customers.
  • While debit card rewards programs can be hard to find, they are out there. Luckily, Bank5 Connect has a debit card rewards program called UChoose Rewards®. Bank5 Connect debit card holders earn 1 point for every $2 spent on signature-based, online, or PIN-less transactions made with their cards.

Ultimately, which card you choose will depend on your personal financial picture, as well as the kind of purchase you’re making. Knowing how your credit and debit cards differ is the first step in selecting the one that’s right for you!

How to Avoid a Card Cracking Scam

Card-cracking is a national problem, with incidents reported in several states including Georgia, Ohio, Washington, and most notably, Illinois. In Chicago alone, a group of 29 are facing charges for stealing about $6.5 million through this scheme. Many of the “victims” do not understand they are facilitating a crime in which they could receive up to 30 years in prison for their participation.

In card-cracking scams, young adults (primarily students, newly-enlisted military, or single parents) are recruited to facilitate fraud against the bank. The perpetrators typically target people via social media and convince them to share their checking account information  in exchange for some type of a kickback – usually in the form of a counterfeit check remotely deposited into their account of which, the person is allowed to keep a portion of the funds. However, the fraudster often removes all of the funds before the bank determines that the check is counterfeit.  Fraudsters may also convince the person to provide them with their debit card, along with their PIN. The person is instructed to report the card as lost or stolen, thereby receiving protection via Reg E, while the fraudster withdraws the funds.

Avoid falling for a card-cracking scam with these simple steps:

  • Do not respond to online solicitations for “easy money.”Card cracking advertisements will suggest that this is a quick, safe way to earn extra cash. Keep in mind that easy money is rarely legal money.
  • Never share your account and PIN number.Keep this information private at all times. By sharing it with others, you expose yourself to potential fraud.
  • Do not file false fraud claims with your bank. By filing a false claim, you are a co-conspirator to fraud. Banks’ detection techniques for card cracking are constantly improving and suspicious claims will be investigated.
  • Report suspicious posts linked with scams.If you notice postings that appear to be linked with a possible scam, report them to the social media site. There is usually a drop down menu near the post to allow for easy reporting.

In addition to being charged as an accomplice to a crime, they are also at risk of having their own money stolen from their accounts and having unauthorized purchases made with their debit cards. Because they consented to provide scammers access to their bank accounts, it is difficult for them to prove that any withdrawals or purchases made were unauthorized. If it sounds too good to be true, than it often isn’t true.

*Source: http://www.aba.com/tools/function/cyber/pages/card-cracking.aspxAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!