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It’s easy to understand why someone would want to keep holiday spending from plunging them into debt — or making existing credit card debt even worse. That’s probably why about two in five shoppers (39%) plan to use debit cards this season, according to the National Retail Federation’s Holiday Consumer Spending Survey. That’s incrementally more than shoppers who plan to use credit cards (38.2%) but within the survey’s margin of error of 1.2 percentage points. (The survey of 7,172 consumers was conducted between Nov. 3 and Nov.10 by Prosper Insights & Analytics.)

The Differences Between Debit & Credit

Although credit and debit cards look pretty much the same, the protections they give to consumers are often very different. The federal protections around credit cards limit consumers’ liability for fraudulent charges to $50. Virtually all credit card issuers tout zero liability policies on top of these federal protections, so there’s a good chance if your card gets compromised, you won’t be on the hook for any of the transactions someone else made. (Credit cards also often offer other benefits — price matching, refunds if prices drop, potential rewards, charge-back privileges and more — that can help with your holiday shopping.)

Debit cards work differently — money gets taken directly out of your bank account whenever you use it. Granted, that’s one of their upsides for many users — you don’t get shocked by a big bill with purchases you forgot about. The card will be declined rather than allow you to spend money that will plunge you into debt. But what happens if someone gets hold of your debit card?

In these instances, under federal law, you have two business days to report the fraud to your financial institution with a maximum of $50 liability. If you wait longer, your liability jumps to $500. After 60 days, you could be fully liable for purchases. And, in the meantime, those funds are missing from your checking account. That can result in a cascade of bounced checks and fees. You could also lose access to your money while things are being sorted out.

Assessing All Your Options

If you are using debit cards to do your shopping because you don’t have credit cards (or don’t want them), it’s a good idea to monitor your account regularly and consider signing up for text or email alerts every time the card is used. That way if a suspicious charge is made, you should be able to at least report the loss promptly.

You may want to consider all of your options, too, before finalizing a holiday payment plan. Cash is an alternative — which the NRF survey said about 20% of us planned to use — because it doesn’t give a thief access to your entire checking account. Another option involves using a prepaid debit card funded with the exact amount you plan to spend. This strategy could limit the amount of fraud you would incur if the card is lost or stolen and also help keep your spending in check. (Parents may want to put teens’ spending money on a prepaid card, for example.) Just be sure to read the fine print associated with any prepaid debit card you are considering as fraud protection policies vary from product to product and there may be fees associated with the card.

If you use a debit card because you’re not sure you can qualify for a credit card, you may simply need to match a credit card to your creditworthiness. You can check Credit.com’s free credit report profile to get an idea of where your credit score stands and subsequently what cards you can expect to qualify for. (Remember, too, while debit cards can help you stay out of debt, they won’t help you build credit.)

If you are using debit cards because you are worried that credit card use will break your budget, there are few tricks you can utilize to avoid debt. One way involves using your credit cards, keeping the receipts together, and transferring the amount spent from your checking account to savings, so those funds are socked away when it comes time to pay your monthly bill. (Or, if your issuer allows, you can pay the amount charged as soon as you finish shopping.) These strategies can help ensure that your checking account balance reflects your spending. It’s more work than using a debit card for sure, but it eliminates the risk that your debit card is used fraudulently and your bank account gets emptied.

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