5 Times You Should Never Use a Debit Card

Debit cards are convenient methods of payment, since they link to your checking account and don't carry interest charges. But due to the way fraud is handled, there are some situations in which you would be better off using a credit card.

Gas stations. In a scam called “skimming”, criminals place small card-reading devices inside gas pumps. When you swipe your debit card, your information can be stolen and used to drain your bank account.

Expensive purchases. Most credit cards offer extra protection on purchases, whereas debit cards generally offer no such help. If something is wrong with the purchase, and the vendor won't issue a refund, you can dispute the charge with your credit card company. If you used a debit card, the money is just gone. Your credit card company may even offer extended warranties on some big-ticket items.

Online purchases. Most online transactions work smoothly and to the satisfaction of both customer and merchant. But occasionally, you may experience dissatisfaction with a product that does not arrive in the condition you expected. A credit card offers better protection in these circumstances. And of course, online purchases may open you up to fraud in the event that your card numbers are intercepted, so using a debit card online can result in a drained back account.

Restaurants. There have been cases of dishonest servers who quickly record customer card information, then later use the card numbers to make online purchases. If you used a credit card, you can dispute the charge. But if you used a debit card, it is much harder to recover your stolen money.

Deposits. If you rent a car, hotel room, or even a moving truck, your final bill is uncertain. If you use a debit card in these cases, the place of business will often place a hold on funds in your account. This could be a problem if you need to access the funds in your bank account. Use a credit card instead, and the charge will simply appear as “pending” on your card statement until a final amount is entered.

If you choose to use a debit card for any purchase, keep in mind that you have two days to report any unauthorized charges. Otherwise, you could be responsible for 500 dollars' worth of damages – or even the entire amount. When in doubt, use your credit card instead.