Between credit and debit cards, digital wallets, peer-to-peer apps, and bank transfers, sending money digitally has become the norm these days. While this convenience is great, it also comes with risks, especially if you don’t take the proper security precautions. And when it comes to choosing a specific payment method, not all options are created equal when it comes to safety and security. Here are the payment methods that offer you the most protection—and the ones to avoid.
These are the safest payment methods
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- Credit cards. Credit cards remain one of the safest options for online purchases. They come with extensive fraud protection from the card issuer. As long as you monitor your statements and report any unauthorized charges promptly, you are protected against liability. Only use credit cards on secure sites and never provide the full card number unless on a trusted merchant’s checkout page.
- PayPal. For peer-to-peer transactions or when shopping on sites that accept it, PayPal is a wise choice. It keeps your financial information private and as long as you avoid sending money to strangers, it offers protection in case of fraud. Only link PayPal to a credit card, rather than directly to your bank account. This lets you retain all of the protections and benefits associated with the underlying card.
- Apple Pay/Google Pay. Making in-store purchases with contactless payment apps on your mobile device adds an extra layer of security. Your actual credit card number is never shared with the merchant. You still get the convenience of tapping to pay, but with more privacy.
- Gift cards. For casual online shopping or gaming, you’re safe purchasing a Visa or Mastercard gift card with a low balance and using that instead of your real credit card. This effectively limits your liability if the card number gets stolen. Just be sure to carefully check the site it’s being used on; if you do fall victim to a gift card scam, here’s how to get your money back.
Riskier payment options (and how to protect yourself anyway)
- Debit cards. It’s not that debit cards are “unsafe,” but that they do not come with the same protections as credit cards. The money comes right out of your checking account, so recovering lost funds due to fraud is more difficult. Only use a debit card on trusted sites.
- Prepaid cards. While safer than debit cards, prepaid cards don’t come with the same strong fraud protections as credit cards. Only use if you have no other options, and be careful when entering the card number online.
- Bank transfers. Sending money directly from your bank account is risky. There are generally no chargeback rights or fraud protections with bank transfers. This method should only be used when paying someone you know and trust.
- Third-party payment apps. Venmo, CashApp, and other peer-to-peer payment apps are risky to use with strangers. Only use them when paying people you know well in your personal network. And never return the money that a stranger “accidentally” sends you on Venmo.
The bottom line
When it comes to fraud protections, credit cards and digital wallets like PayPal are your best choices for secure online and digital payments. Always exercise caution in sharing bank information with a merchant, and avoid using third party payment apps with strangers. Ultimately, your risk is less about the payment method itself, and more about avoiding scammers and other bad actors. For more, stay up-to-date with Lifehacker’s scam coverage here.