2002-07-06 / Columnists

Notes On Consumer Affairs

By Assemblywoman Audrey Pheffer

Today, at the checkout counter of some stores, there are many choices in which to pay.  A consumer could pay by cash, check, credit or debit card. Many debit cards can also be used as a credit card.  This brings about the question of what, if any, is the difference between a credit and a debit card?

A credit card is a form of open-end credit that allows you to charge items
for more than your actual balance with the bank.  Open-end credit can be used again and again, generally until you reach a certain prearranged
borrowing limit.  Credit cards afford the convenience of buying goods now and paying for it in the future.  When you make a purchase with a credit card, you will be billed at a later date.  If you do not pay the balance in
full, you almost always incur interest and other charges.

If a credit card is lost or stolen, a consumer is not liable for the unauthorized use of the card after the loss or theft is reported.  A consumer is liable for the unauthorized use of a credit card before the loss or theft is reported.  The liability is capped at $50.00.

A debit card is a tool where a consumer allows a bank card issuer to deduct money from a deposit account to cover unpaid debts.  A debit card causes funds to be withdrawn automatically from a consumers account with the institution thereby giving a consumer direct access to checking and savings accounts.  When you make a purchase with a debit card, you pay for the good at the time of purchase directly from your bank account.

If a debit card is lost or stolen, a consumer is not liable for the unauthorized use of the card after such loss is reported.  When a consumer reports the loss of theft of a card within two days of learning of its loss,
liability is capped at $50.00.  However, if a consumer fails to notify the
issuer within two days of learning of the loss, liability for unauthorized use may be up to $500.  Unlimited loss is risked if a consumer fails to report an unauthorized transfer or withdrawal within 60 days after a bank statement is mailed to the consumer.

Due to the increasing popularity and use of debit cards, lawmakers are
attempting to afford debit cards with the same protections afforded to credit cards under current state law.  One bill, A.5973-B, would prohibit merchants from writing personal information on debit card slips.  In addition, A.8453-C would increase protection for both credit and debit cards
by limiting the printing of card numbers on a sales slip to the last four digits of such card number.

Since federal and state law, as well as many credit card policies, provide more protection for credit cards over debit cards, it is important for you to decide when it is appropriate to use credit and debit cards.  If your debit card allows you the option to use it as a credit card, you should look into what extra protections that option affords.

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