Don’t Pay With Debit Card; Dave Ramsey is WRONG!

Yes, The Money Heifer, is doing an about-face, a 360 degree turn.

For those who have followed this blog, you know I’m a fan of Dave Ramsey, but I don’t practice everything he preaches.  I was persuaded by his arguments to use a debit card versus a credit card.  With a debit card, you are spending what you have in your account.  Basically, Dave Ramsey promotes the use of a debit card to help individuals avoid drowning in credit card debt.  A noble effort.

Last August my debit card was compromised.  And I hadn’t used that particular card in months.  The bank offered to send me a replacement debit card and I refused.  It was the second time my debit card had been compromised (the bank has since sent me another debit card in the mail; haven’t bothered to activate).

Little by little there are news stories here and there about money being withdrawn from individual’s accounts because thieves have managed to obtain pin numbers for debit cards.  Well, with the recent swipe of debit card data from Michaels – chain of arts and crafts store – I’m crying uncle!  No more paying with debit card.  Credit card only.

In a May 13, 2011 Wall Street Journal  article by Ann Zimmerman and Miguel Bustillo, one learns how the thieves collected the data and stole money from individual accounts.

The thefts apparently involved the use of electronic devices called skimmers that allowed crooks to record information from shoppers’ debit cards and steal their personal identification numbers, or PINs.

*                                                           *                                                               *

Thieves were able to use the stolen data to create duplicate debit cards and use them in automated machines to steal money directly from victims’ bank accounts, primarily in denominations of $500.


What’s worse is technology exists where these debit card transactions would not be so vulnerable but, hey, it is an expense.

A type of debit card embedded with a microchip instead of a magnetic strip is considered more secure and is standard issue in Europe, said Ms. Litan.  But U.S. retailers have resisted the cards because of the cost involved in replacing existing card processors to read the microchip.

Okay, you’ve been warned.  Do you still want to pay by debit card?  I think not!

Pay by credit card instead.  That’s right, CREDIT CARD.

Shift the risk of fraud to the big companies by using credit cards (they can afford it) versus you bearing the  risk of fraud by  losing a chunk of money in your account by using debit card.


1 Comment

  1. May 18, 2011 at 9:30 pm

    I have to say I have never Trusted a debit card and never had one. I am a big believer in rewards credit cards. And because the full balance of my cards is automatically withdrawn from my bank every month it functions for me like a debit card.

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