Credit for Purchases, Debit for the ATM

Put purchases on a credit card. Under the Truth in Lending Act (TILA), your liability for unauthorized use is capped at $50, and while you dispute a charge, the money at stake is the card issuer's, not yours. The Fair Credit Billing Act lets you hold back the disputed amount while the issuer investigates.

Prefer credit for purchases when you have one; use debit for ATM cash. If you only have debit, avoid spending from the rent account and report fraud within two business days. A debit swipe takes money that is already yours. Under the Electronic Fund Transfer Act (EFTA), your liability depends on how fast you report: $50 if you report within two business days of learning of the loss, up to $500 if you wait longer, and no limit at all if you miss the sixty days after your statement. With debit, speed is your protection. With a credit card, the cap protects you.

Choosing “credit” at checkout with a debit card, or using a debit card with a network logo, still takes money from your bank account. Regulation E applies, not TILA. The money is gone from your account while you argue. The logo does not change the law.

If you do not have a credit card yet, do not spend from the account that holds your rent. Cash from an ATM is a better choice than a debit swipe.

Once you can get a starter credit card, use it for purchases. Until then, avoid spending from the rent account.

This is not legal advice. The card networks' “zero liability” policies are extra promises on top of the law, and they can be withdrawn. Read your own card issuer's terms.