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You may be taking the responsible route this year and ditching the credit card for a debit card instead. But is this the smartest – or safest – decision to make?

For many individuals burned by the economy and the credit crisis, turning to debit cards to make purchases just makes more sense than credit cards. According to their rational, using a debit card will help them to better manage their budget and stay within their budget.

Still, others are simply turning to their debit cards out of anger with the credit card industry. Many credit card customers have ditched their credit cards after their creditor either lowered their credit limit or increased their interest rate.

With Benefits Come Risks

Although the thinking behind using a debit card makes sense, there are a number of risks that go along with carrying a debit card around this holiday season.

First, it is important to realize that carrying around a card that is linked to your bank account is generally risky. If the debit card is lost or stolen, your bank account and its contents may be at risk. After all, the last thing you need this holiday season is for a credit card thief to drain your checking account.

Better Safeguards for Credit Cards

Although bank and debit cards offer protection against unauthorized use, there are more safeguards in place for credit cardholders. In addition, it may take some time for the bank to reimburse you for stolen money, which may simply come too late when you have bills and other household expenses to take care of.

The Threat of Bank Overdraft Fees

Second, although a debit card is a great way to keep your spending in check, if you don’t pay close attention to your balance you could be faced with stiff overdraft fees. Many individuals simply assume that their card would be declined if there was not enough money in the account, but that is not always the case. In fact, consider that banks collected nearly $35 billion in overdraft fees last year alone.

Keep in mind that the median overdraft fee is $35 for each purchase, so imagine what a handful of overdrafts in one day could do to your coveted budget. Credit card interest rates aren’t sounding so bad anymore, are they?

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