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How To Pay: Credit Vs. Debit

By Aparna Zalani
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FORT WORTH (CBSDFW.COM) - Many consumers are still feeling the effects of last year’s massive data breach at Target, Neiman Marcus and other stores.

The breach cost consumers and banks millions of dollars.

Among the victims was Southlake resident Neeta Darnule. Late last month, she got a call from her American Express customer service representative to verify a $108 charge at a Target in Florida.

“I clearly said, ‘No! I’m in Texas,’” she told him.

Lucky for her, Amex canceled her card and sent her a new one. Problem solved.

Credit cards have better protections for such issues, said Todd Mark of Consumer Credit Counseling. With debit cards, which are linked to your checking account, you could end up losing a lot more while you’re trying to get your stolen money back, Mark said.

“You’re trying to work this through with your creditor, with your financial institution, and then your money is gone,” he said, adding, “So while you’re working on this, it may mean that your mortgage check is bounced.”

Some banks will waive penalties for bounced checks, but it is still a hassle. Mark says it could take up to a week or more to get the money back into your account.

One thing that plastic card users don’t have on their side is time.

Mark says if you notify your bank within two days after you find your money is gone, you could end up holding the bag for $50 in penalties. But a wait between two and sixty days could cost you $500, he said. And if you wait longer, according to Mark, you could be out of luck.

“If you wait outside of 60 days, let’s say you’re not paying attention to your statements, that’s kind of on you,” says Mark.

On the other hand, credit cards have charge-back rights, allowing consumers 60 days to dispute a charge, if you did not authorize a purchase – like in Darnule’s case – or the charge results in an undelivered or broken product.

Mark warns about the danger of credit cards, especially for those who use the card to charge way beyond their means.

Here are some of the steps Mark says you can take to protect your money:
·         Check your statements regularly
·         Notify your bank of all unrecognized charges right away
·         Shop at secure online sites with an HTTPS in the web address
·         And monitor credit by getting a free credit report

(©2014 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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