Credit Cards And Online Shopping

There was a time when the thought of using your credit card online was scary. Who knew what kind of devious hackers were out there on the Internet waiting to make off with your account information. I first started using the Internet in 1995, and it is hard to believe that 1995 was actually fifteen years ago.

These days, most of us make purchases over the Internet regularly, but the security of our method of payment is still worth considering. The New York Times recently featured an article about the the advantages and disadvantages of various methods of payment. The article is fairly spot on when it comes to credit cards, and the bottom line is that your risk when making a purchase online is zero.

Debit Versus Credit

When it comes to using debit cards online, the article downplays the risks substantially. Debit cards are governed by entirely different regulations than credit cards. The Times notes that if you report suspected fraud within two days of discovering the charge, your liability is capped at $50. If you notice the fraud within 60 days, the liability is capped at $500.

What the Times leaves out are two of the key differences between debit and credit cards. First, your debit card is directly linked to your bank account. A fraudulent transaction can trigger a chain of events can include bounced checks and insufficient funds to pay bills electronically. In fact, such costly and embarrassing events may be your first indication that your debit card has been used fraudulently. Your next step may a time consuming process where you go about making a fraud claim and untangling the mess. During this time, you are still without your funds while the bank goes through it’s process. With a credit card, you may not notice fraudulent activity until you receive your statement in the mail. Even if I were to notice a massive fraudulent charge, I would never be short of funds for a moment. With a credit card, I am not putting my bank account and bill payment at risk when I give out my card number.

The other substantial difference between credit cards and debit cards is that credit cards protect you not just from outright fraud but also from non delivery of goods and services, or goods and services that are not as described. With a debit card, when you authorize payment, it is just about the same as paying cash. With a credit card, you still have the opportunity to charge back a merchant if their products or services are not delivered in a timely manner or are significantly different than advertised.

Alternative Forms Of Payment

Paypal, Google Checkout, and Bill Me Later are three of the most popular alternative forms of payment. I am seeing these pop up increasingly on travel web sites. The article points out that Paypal and Google Checkout provide some measure of security in that they act as intermediaries storing your personal information. The problem is that both Paypal and Google are not known for their responsiveness to customer issues, to put it mildly. The Internet is filled with horror stories about Paypal ignoring user issues and Google being impossible to reach. BillMeLater is a kind of like the online version of a payday loan. If you do not comply precisely with the terms, you are on the hook for all sorts of penalties and fees that would make a loan shark blush. When I charge something to my credit card, I get the bill later, and that seems to work just fine for me.

In Conclusion

Shopping on the Internet is reaching a level of reliability that would have been hard to imagine in the early 90s. While companies keep trying to invent a more secure way to make purchases online, it turns out that they need not invent the wheel. With zero liability, your credit card remains your best bet for splurging online.