Should You Use Credit or Debit When Shopping Online?

There's nothing wrong with shopping online -- it's fast, easy and convenient -- but it's also important to make sure you know and trust the online companies you're frequenting.

We recently received this question from a reader on how to cyber-shop safely:

"I use my credit card to make purchases online and usually receive these purchases through email. Is this safe? If not, what should I do? Should I cancel my credit card ASAP?”

Before you panic and cancel your credit card, it may help to know that there are laws in place that protect you from fraudulent purchases or credit card theft. In fact, using a credit card for online purchases is the smartest way to go when shopping online. Thanks to the Fair Credit Billing Act, your liability for unauthorized credit card charges is limited to no more than $50, as long as you report the charge within 60 days of the incident. Even then, most credit card issuers offer zero liability protections that would waive the $50 fee in credit card fraud/theft cases.

Debit cards, on the other hand, are tied directly to your bank account and even if you report the theft immediately, you may have to wait several days to get your money back. If you report the theft within two business days of the transaction, your liability is limited to $50 but if you wait any longer, your liability jumps to $500. Wait longer than 60 days and you're liable for the full amount. When shopping online, always choose credit over debit just to be safe.

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Tips for Safer Shopping Online

If you're worried about shopping online, here are more tips on how to shop safely:

• Shop on secure sites. They’ll have “https” in the address bar.
• Be sure to enter the correct URL. Scammers often buy misspelled domains to trick consumers into entering their personal information.
• Never enter your Social Security number or your passwords to your email and bank accounts as part of the buying process with online retailers.
• If you think you've landed on a suspicious website, leave immediately. Don’t click on any of the site’s buttons, run content or download software.
• Use different passwords for online retailers, personal email and banks accounts. That way, if a hacker cracks one password for one account, he won’t have access to others.

And if you want to take it a step further, you can always use a temporary credit card number.

Image: Jupiterimages