Q: I don’t have a credit and would like to know, can you use a debit card online?
A: Nowadays most debit cards issued in the U.S. are associated with Visa or Mastercard. If your debit card has one of these logos on it, that means purchases can be done either under “debit” or “credit” (this is why you are asked that question when you swipe your debit at a store). When you buy something online with a MasterCard or Visa debit card, the system will automatically process it as a “credit” transaction. So you can use debit online as long the card has a Visa/MasterCard/AmEx/Discover logo on it.
But be warned because because, unfortunately, debit cards do not confer same consumer rights as credit cards. The laws for fraud liability and other protections are substantially weaker with debit, as they were written back in the days when debit cards could only be used at ATMs to get cash. That’s why almost anyone would be better off (and safer) to have a credit card for designed for bad credit or limited credit than having only a debit card (that is, if you’ve avoided getting one in the past due to your perceived inability to qualify).
When you’re at a store and select “debit” it will ask you to enter your debit card’s PIN. However when you select “credit” it will be processed like a regular credit card transaction that you sign for. Now that doesn’t mean you are actually buying on credit… it just means your purchase is processed over the credit card network before withdrawing the funds from your checking account. Debit card issuers actually prefer that you do this rather than entering a PIN because they collect much higher interchange revenue from the merchant when transactions are processed as credit.
*IMPORTANT* Just because you can use a debit card to buy things online, it doesn’t necessarily mean you should. Here’s why:
Debit cards don’t give you the same protection as credit cards. If your credit card account is fraudulently used, by federal law the most you can be held liable for is up to $50 (and the vast majority of banks won’t hold you liable for anything). Of course, you still have to notice and report the fraudulent activity to your card issuer to have any charges removed.
However, with debit card fraud the law states your liability can be up to $500 if you don’t notify the bank within two days of the fraud and potentially unlimited if you don’t report it after 60 days. While it’s true most debit card issuers voluntarily give customers the $50 cap, there have been many reports of them not always honoring that.
Last but not least, credit cards offer a number of other benefits on your purchases. For example, if your eligible purchase is stolen or damaged during the first 90 days, it would be covered for free if you bought it with your American Express card, for example.
So can you use a debit card for online purchases? Yes. Is it the best option? No.
Written or last edited on August 25, 2014