In light of the recent security breach at Target and now Neiman Marcus (NM) the topic has been on a lot of people’s minds. Which card is better, debit or credit, when looking at extra protection needed during this crisis?

An investigation by F.B.I., The Secret Service, the Justice Department and numerous others found that hackers stole the personal information of at least 70 million customers, not the 40 million first suspected, and that theft included names, mailing addresses, telephone numbers and email addresses.

Although for years financial gurus have strongly advised against using credit cards frequently because of the expense. This because of the tenancy for most American’s to run those cards up to limits that are exasperating, incurring outrageous interest fees as well. But during one of the most heightened security breach crimes on the books, there is a change in the consensus.

Even though both cards were affected during the Target and NM breach, and Target has assured its customers that they won’t be held financially responsible for any fraud that occurs on their credit or debit card, the best solution of course, is to use neither.

But, with a debit card, you are less protected and have fewer rights when it comes to purchases that you didn’t authorize. And, if you do have charges to your account made by thieves, your liability is greater with a debit card as is the time to resolve the theft.

A debit card requires that you notify your bank within two days of the transaction in question. If you read that little fine print that comes along with your card, you’ll note that the Federal Deposit Insurance Corporation (FDIC) states, “To be fully protected under the law, you must submit specific information about unauthorized debit and ATM card transactions within a short time period,” stressed Kirk Daniels, an FDIC Supervisory Consumer Affairs Specialist. “That’s also why it’s important to review your bank statements and report a problem as soon as possible.”

So what if you don’t contact them within that short time period? Your liability fully depends on how quickly you report it to your bank. If you notify them after the required two days, under the law you could lose up to $500, or more. Depending on your bank, they may waive all liability for unauthorized transactions but that is completely up to them.

Another downfall is that banks have much more time to conduct an investigation after the theft is reported. Some banks could take up to 20 days and in special circumstances up to 45 – 90 days to figure out what happened, but most will refund the stolen funds on a temporary basis. Don’t count on that though, each bank is slightly different.

“Until the bank provides provisional credit, you could temporarily be out of pocket for the amount in dispute,” said Richard Foley, an FDIC attorney who specializes in consumer issues. “This would not typically happen with a credit card because consumers can withhold payment of the amount in dispute.”

With a credit card you have much better control. By withholding payment and filing a fraud report, disputing charges can be addressed immediately and not directly affect your bank account.

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