IndiaLends Advisory

By IndiaLends Advisory

Mar 18, 2019

Why You Should Pay with Credit Cards For Online Shopping

Online shopping has drawn almost all of us into an addicting world of discounts, a vast range of goods to choose from and of course all with the ease of shopping from home. However, criminals are finding it a good hunting ground to scam the gullible. It is hard to know who they are since they run their operations from the anonymity of the internet. Any of us can be taken in. I recall a couple of years ago making a hotel booking for what looked a great hotel from their website. Only to reach there and find it did not exist. However, an online purchase can be safe if you take certain precautions. So let’s answer the question – Why are credit cards safer than debit cards for online shopping?

Withdrawal on Credit Limit vs. Deduction on Cash Account

The headline says it all about the advantage of paying by credit card vs. debit card. In an online transaction, you will have to enter your card details like Number, CVV, Expiry Date, Start Date. If this information is skimmed off by an online scammer they can easily use your card for nefarious purposes. In case of a debit card, it means that your account will be debited of cash. A credit card, on the other hand, will not be a direct loss from you. The amount is drawn from your credit limit and can be disputed so you are not charged for it.

Online Safety Tip:

Whether you use your credit card or debit card for some online therapy, do ensure your transaction is being done on https:// rather than http:// The extra ‘s’ means that the site uses an encryption system to send information and that is hard to crack. Also to get an encrypted site, business credentials have to be sent to the accrediting agency so there is more safety on such sites. It is best to use known websites for online transactions. Use COD for lesser-known sites.

Most credit cards have better Zero-fraud Liability

Even though both debit and credit cards offer certain protection, credit cards provide extra layers of safety. Most credit cards offer a zero-fraud liability. This means you cannot be made to pay for purchases you never made. In case someone gets your details and makes an online transaction and you report it as fraudulent, you will not be held responsible. Debit cards, on the other hand, are not so comprehensive and losing money from your account can be horrifying. You will have to wait for days or weeks and if you have not reported it within 2 business days you might have to bear the brunt of the loss. This is another important point when looking at credit cards vs. debit card pros and cons.

Online Safety Tip:

Never use public wifi to make an online transaction. Hackers can get your information this way. Always use private wifi and on your own personal laptop or computer.

Related Article: Identity Theft and Fraud Protection of Credit Cards

It is easier to dispute charges on a Credit card

While many of us use both our debit cards and credit cards, we do not realize that even from a known seller, we can have issues with the purchase we make. What are you going to do if something you ordered online comes to you damaged? While customer redressal in most of these e-commerce sites does allow for returns. Many do create problems. In such cases, paying on a credit card, you can call your issuer and ask to withhold payment. You can’t do this with a debit card purchase since money has already been deducted from your account.

Online Safety Tip:

Ensure that your laptop or computer has antivirus software and keep updating it.  Also, ensure that you keep your browser and operating system updated. You don’t have to worry about doing this even if you are not very tech-savvy. The updates often happen automatically or you will be prompted to take action.

Credit Cards help you build a credit score

When you are paying by credit card, you are actually taking a short term loan. Making small purchases on your credit card or making a purchase on a 0% EMI and paying it off fully by the due date will keep your credit score healthy.  Debit cards will not help you in this respect. Only your credit card payments get reported to the credit score agencies like TransUnion, Experian, and Equifax. So that’s another reason to use a credit card instead of a debit card.

Credit Card Payment Tip:

Pay the balance in full that is mentioned in your credit card monthly statement and avoid interest charges. Ensure it is paid by the due date. Also, use your card cautiously, do not go overboard as that will build up a credit balance and you will have to pay interest.

Previous Article: A Guide To Income Tax Investment Proofs

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