Credit and Debit Card Protection
Friday, August 9, 2013
Credit card and debit card fraud is unfortunately very common and very scary. Many organizations now offer credit card and debit card fraud protection plans to card holders. However, some basic questions most people ask are; are these insurance plans are really helpful? Are they worth the effort and money? Is it better to go for debit card protection or credit card protection? Is the payable amount appropriate?
There are two forms of plastic money, which people use in place of cash when the need arises. These are credit and debit cards. Credit cards, as the name implies, allow people to borrow fixed credit amounts from the bank, which must be repaid in due time. Debit cards on the other hand, operate in a different manner than credit cards. They allow the withdrawal of money directly from savings accounts, which means no credit accumulation.
Debit card companies offer debit card protection, which enables users to use a PIN (Personal Identification Number) to access the cash from their account via an automated teller machine (ATM). Without using a PIN, users cannot be granted access to their accounts. This is what is referred to as “debit card protection”. However, the PIN is not enough to protect the card against all fraudulent activities.
As compared with debit card companies, credit card companies offer a much different form of protection. When using a credit card, the funds are actually borrowed, with a set time frame to pay it back. It is just like taking a loan from the bank and promising to repay it before a particular date. Since most credit card companies offer 21 days to have the transaction paid off, transactions can be traced and some can even be cancelled. This is the unique protection that a credit card company can offer. There are now PINs associated with credit cards as well, which makes credit cards a bit more protected. Some cards do not have the ‘chip’ technology, but most do, and now to utilize a credit card you need a signature and a PIN. As well, there is a three digit number on the back of each credit card that is unique to that card.
Consumers should watch their financial statements continuously to make sure there are no unknown charges. Never have your PIN written on your card, and never share your PIN with anyone, although credit card companies offer some fraud protection, it is always better to err on the side of caution. Also remember to know who you are giving your credit card number to (especially when ordering online or over the phone).