LEGAL MATTERS: Use Your Credit Card – Not Your Debit Card
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Wednesday, November 27, 2013
John T. Longo, GoLocalWorcester Legal Contributor
Forget what your parents told you and reach for a credit card when you are shopping this holiday season. Using a credit card, instead of cash or a debit card, is the best way to protect yourself from being ripped off. And don’t confuse your debit card (that has a Visa or MasterCard logo on it) with a real credit card.
Understanding the Difference Between Debit and Credit Cards
Your debit card is tied directly to your bank account; when you use it, your bank immediately takes the money out of your account. In the old days (does anyone else remember using their Ready Freddy card from Old Stone Bank?), you could only use your debit card at ATM machines. Now debit cards come with a Visa or MasterCard logo on them so you can use them just about anywhere. But they are still tied directly to your bank account; when you buy something, your bank immediately takes the money out of your account and sends it to the merchant you are dealing with.
A credit card is not tied to your bank account. When you buy something using your credit card, the bank that issued the card sends its money to the merchant and then sends you a bill at the end of the month for everything you bought with the bank’s money. If you do not pay the bill in full, the bank is happy because it gets to charge you interest.
If it is not a credit card, why does the cashier ask me ‘debit or credit?’
Despite what you may think when a cashier asks you “debit or credit,” you cannot turn your debit card into a credit card. What the cashier is really asking is how the transaction will be processed. If you say ‘credit’, it is processed one way and you will probably have to sign your name. If you say ‘debit’ it is processed another way and you will probably have to punch in your PIN. Most stores prefer to use the debit process because it lowers the transaction fees they get charged.
Which is better?
Federal law offers more protections to consumers who use credit cards than to those who use debit cards. The biggest difference is you do not have to pay credit card charges for goods or services you do not receive. So if you use your credit card to buy an Xbox One from an on-line merchant that never delivers it, you will not have to pay that part of your credit card bill. Or, if you manage to find an Xbox One at your local Best Buy but it is broken when your kids take it out of the box, you can refuse to pay the credit card charge. In either case if you paid with your debit card – or worse, cash – the chase will be on to get your money back.
There are other differences as well. For example, if your credit card account number is stolen, you are usually liable for only the first $50 of fraudulent activity; the limit is typically higher for debit cards. Also, if you have a dispute with a merchant you paid with your credit card, your credit card company may have to help you resolve it and you might not have to pay the charge; if you paid with your debit card, your bank does not have to help and it won’t ever give you your money back. Using your credit card also builds your credit history and can earn you reward points; using cash or your debit card does neither.
This chart may help you understand why it is usually better to use your credit card.
For More Information
Learn more about how to dispute credit card charges, and the federal Fair Credit Billing Act that protects you when using credit cards, here.
If you ignored my advice and used your debt card, you can learn more about the federal Electronics Funds Transfer Act, and the limited protections it offers you, here.
Related Slideshow: Central MA Unemployment Rates #72 - #1
Here are the unemployment statistics for each town in Central Mass, ranked from least to most-
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#72
Harvard
Unemployment rate, August 2013: 4.4%
Unemployed: 140
Employed: 3,059
Total workforce: 3,199
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#71
Hopkinton
Unemployment rate, August 2013: 4.7%
Unemployed: 369
Employed: 7,523
Total workforce: 7,892
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#69 (Tie)
Berlin
Unemployment rate, August 2013: 4.9%
Unemployed: 79
Employed: 1,520
Total workforce: 1,599
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#69 (Tie)
Hopedale
Unemployment rate, August 2013: 4.9%
Unemployed: 159
Employed: 3,074
Total workforce: 3,233
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#67 (Tie)
Bolton
Unemployment rate, August 2013: 5.1%
Unemployed: 147
Employed: 2,733
Total workforce: 2,880
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#67 (Tie)
Southborough
Unemployment rate, August 2013: 5.1%
Unemployed: 257
Employed: 4,813
Total workforce: 5,070
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#66
Marlborough
Unemployment rate, August 2013: 5.5%
Unemployed: 1,283
Employed: 21,909
Total workforce: 23,192
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#65
Northborough
Unemployment rate, August 2013: 5.6%
Unemployed: 432
Employed: 7,259
Total workforce: 7,691
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#62 (Tie)
Mendon
Unemployment rate, August 2013: 5.7%
Unemployed: 196
Employed: 3,218
Total workforce: 3,414
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#62 (Tie)
Princeton
Unemployment rate, August 2013: 5.7%
Unemployed: 107
Employed: 1,764
Total workforce: 1,871
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#62 (Tie)
Topsfield
Unemployment rate, August 2013: 5.7%
Unemployed: 176
Employed: 2,910
Total workforce: 3,086
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#61
Boylston
Unemployment rate, August 2013: 5.8%
Unemployed: 134
Employed: 2,167
Total workforce: 2,301
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#58 (Tie)
Shrewsbury
Unemployment rate, August 2013: 5.9%
Unemployed: 1,084
Employed: 17,152
Total workforce: 18,236
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#58 (Tie)
Sterling
Unemployment rate, August 2013: 5.9%
Unemployed: 256
Employed: 4,112
Total workforce: 4,368
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#58 (Tie)
Westborough
Unemployment rate, August 2013: 5.9%
Unemployed: 525
Employed: 8,415
Total workforce: 8,940
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#56 (Tie)
Sturbridge
Unemployment rate, August 2013: 6.0%
Unemployed: 306
Employed: 4,763
Total workforce: 5,069
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#56 (Tie)
Upton
Unemployment rate, August 2013: 6.0%
Unemployed: 241
Employed: 3,752
Total workforce: 3,993
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#53 (Tie)
Douglas
Unemployment rate, August 2013: 6.1%
Unemployed: 290
Employed: 4,469
Total workforce: 4,759
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#53 (Tie)
Hudson
Unemployment rate, August 2013: 6.1%
Unemployed: 696
Employed: 10,740
Total workforce: 11,436
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#53 (Tie)
Milford
Unemployment rate, August 2013: 6.1%
Unemployed: 954
Employed: 14,670
Total workforce: 15,624
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#51 (Tie)
Oakham
Unemployment rate, August 2013: 6.3%
Unemployed: 65
Employed: 973
Total workforce: 1,038
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#51 (Tie)
Sutton
Unemployment rate, August 2013: 6.3%
Unemployed: 302
Employed: 4,500
Total workforce: 4,802
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#48 (Tie)
Holden
Unemployment rate, August 2013: 6.4%
Unemployed: 576
Employed: 8,430
Total workforce: 9,006
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#48 (Tie)
Paxton
Unemployment rate, August 2013: 6.4%
Unemployed: 158
Employed: 2,327
Total workforce: 2,485
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#48 (Tie)
Shirley
Unemployment rate, August 2013: 6.4%
Unemployed: 223
Employed: 3,269
Total workforce: 3,492
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#46 (Tie)
Ayer
Unemployment rate, August 2013: 6.5%
Unemployed: 283
Employed: 4,100
Total workforce: 4,383
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#46 (Tie)
Hardwick
Unemployment rate, August 2013: 6.5%
Unemployed: 94
Employed: 1,359
Total workforce: 1,453
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#45
Grafton
Unemployment rate, August 2013: 6.6%
Unemployed: 635
Employed: 9,043
Total workforce: 9,678
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#42 (Tie)
Hubbardston
Unemployment rate, August 2013: 6.7%
Unemployed: 163
Employed: 2,255
Total workforce: 2,418
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#42 (Tie)
Millbury
Unemployment rate, August 2013: 6.7%
Unemployed: 489
Employed: 6,787
Total workforce: 7,276
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#42 (Tie)
Petersham
Unemployment rate, August 2013: 6.7%
Unemployed: 43
Employed: 596
Total workforce: 639
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#40 (Tie)
Lancaster
Unemployment rate, August 2013: 6.8%
Unemployed: 240
Employed: 3,281
Total workforce: 3,521
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#40 (Tie)
Townsend
Unemployment rate, August 2013: 6.8%
Unemployed: 346
Employed: 4,738
Total workforce: 5,084
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#38 (Tie)
Charlton
Unemployment rate, August 2013: 7.0%
Unemployed: 491
Employed: 6,483
Total workforce: 6,974
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#38 (Tie)
Dudley
Unemployment rate, August 2013: 7.0%
Unemployed: 431
Employed: 5,696
Total workforce: 6,127
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#33 (Tie)
Auburn
Unemployment rate, August 2013: 7.1%
Unemployed: 613
Employed: 8,024
Total workforce: 8,637
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#33 (Tie)
East Brookfield
Unemployment rate, August 2013: 7.1%
Unemployed: 86
Employed: 1,129
Total workforce: 1,215
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#33 (Tie)
Holland
Unemployment rate, August 2013: 7.1%
Unemployed: 99
Employed: 1,291
Total workforce: 1,390
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#33 (Tie)
New Braintree
Unemployment rate, August 2013: 7.1%
Unemployed: 40
Employed: 524
Total workforce: 564
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#33 (Tie)
Rutland
Unemployment rate, August 2013: 7.1%
Unemployed: 313
Employed: 4,081
Total workforce: 4,394
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#32
Oxford
Unemployment rate, August 2013: 7.2%
Unemployed: 548
Employed: 7,032
Total workforce: 7,580
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#31
Uxbridge
Unemployment rate, August 2013: 7.3%
Unemployed: 536
Employed: 6,784
Total workforce: 7,320
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#30
Leicester
Unemployment rate, August 2013: 7.5%
Unemployed: 450
Employed: 5,565
Total workforce: 6,015
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#27 (Tie)
Ashburnham
Unemployment rate, August 2013: 7.6%
Unemployed: 236
Employed: 2,865
Total workforce: 3,101
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#27 (Tie)
Lunenburg
Unemployment rate, August 2013: 7.6%
Unemployed: 398
Employed: 4,850
Total workforce: 5,248
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#27 (Tie)
Northbridge
Unemployment rate, August 2013: 7.6%
Unemployed: 608
Employed: 7,383
Total workforce: 7,991
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#26
Spencer
Unemployment rate, August 2013: 7.7%
Unemployed: 492
Employed: 5,935
Total workforce: 6,427
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#24 (Tie)
Ware
Unemployment rate, August 2013: 7.9%
Unemployed: 394
Employed: 4,611
Total workforce: 5,005
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#24 (Tie)
West Boylston
Unemployment rate, August 2013: 7.9%
Unemployed: 259
Employed: 3,035
Total workforce: 3,294
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#21 (Tie)
Brimfield
Unemployment rate, August 2013: 8.0%
Unemployed: 152
Employed: 1,745
Total workforce: 1,897
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#21 (Tie)
Templeton
Unemployment rate, August 2013: 8.0%
Unemployed: 305
Employed: 3,520
Total workforce: 3,825
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#21 (Tie)
Westminster
Unemployment rate, August 2013: 8.0%
Unemployed: 297
Employed: 3,417
Total workforce: 3,714
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#19 (Tie)
North Brookfield
Unemployment rate, August 2013: 8.1%
Unemployed: 195
Employed: 2,224
Total workforce: 2,419
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#19 (Tie)
Palmer
Unemployment rate, August 2013: 8.1%
Unemployed: 508
Employed: 5,772
Total workforce: 6,280
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#18
Warren
Unemployment rate, August 2013: 8.4%
Unemployed: 209
Employed: 2,271
Total workforce: 2,480
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#17
West Brookfield
Unemployment rate, August 2013: 8.6%
Unemployed: 155
Employed: 1,652
Total workforce: 1,807
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#15 (Tie)
Royalston
Unemployment rate, August 2013: 8.7%
Unemployed: 52
Employed: 547
Total workforce: 599
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#15 (Tie)
Webster
Unemployment rate, August 2013: 8.7%
Unemployed: 723
Employed: 7,569
Total workforce: 8,292
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#13 (Tie)
Brookfield
Unemployment rate, August 2013: 8.8%
Unemployed: 163
Employed: 1,695
Total workforce: 1,858
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#13 (Tie)
Millville
Unemployment rate, August 2013: 8.8%
Unemployed: 158
Employed: 1,642
Total workforce: 1,800
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#11 (Tie)
Barre
Unemployment rate, August 2013: 8.9%
Unemployed: 244
Employed: 2,510
Total workforce: 2,754
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#11 (Tie)
Worcester
Unemployment rate, August 2013: 8.9%
Unemployed: 7,562
Employed: 77,653
Total workforce: 85,215
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#9 (Tie)
Ashby
Unemployment rate, August 2013: 9.0%
Unemployed: 149
Employed: 1,503
Total workforce: 1,652
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#9 (Tie)
Orange
Unemployment rate, August 2013: 9.0%
Unemployed: 332
Employed: 3,356
Total workforce: 3,688
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#7 (Tie)
Blackstone
Unemployment rate, August 2013: 9.2%
Unemployed: 488
Employed: 4,824
Total workforce: 5,312
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#7 (Tie)
Clinton
Unemployment rate, August 2013: 9.2%
Unemployed: 676
Employed: 6,652
Total workforce: 7,328
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#6
Winchendon
Unemployment rate, August 2013: 9.3%
Unemployed: 453
Employed: 4,407
Total workforce: 4,860
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#5
Leominster
Unemployment rate, August 2013: 9.6%
Unemployed: 1,937
Employed: 18,141
Total workforce: 20,078
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#3 (Tie)
Southbridge
Unemployment rate, August 2013: 9.9%
Unemployed: 787
Employed: 7,127
Total workforce: 7,914
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#3 (Tie)
Gardner
Unemployment rate, August 2013: 9.9%
Unemployed: 934
Employed: 8,514
Total workforce: 9,448
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#2
Fitchburg
Unemployment rate, August 2013: 10.0%
Unemployed: 1,829
Employed: 16,435
Total workforce: 7,914
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#1
Athol
Unemployment rate, August 2013: 10.5%
Unemployed: 543
Employed: 4,647
Total workforce: 5,190
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