Pros & Cons of Using Credit Cards on the Internet

Online shopping lets you buy almost anything you need from the comfort of your own home, but it can be less convenient than traditional shopping when it comes to checking out. Internet retailers typically require electronic payment in the form of a credit card, debit card or some other online payment system like Paypal or Google Wallet. Using a credit card to pay for online purchase has a few notable advantages and disadvantages versus other payment methods.

Fraud Protection

One of the biggest advantages of using a credit card for online purchases is that credit cards have built-in fraud protection. If a charge appears on your credit card that you didn't make, you can dispute the charge and your credit card company may eliminate the charge entirely. Federal law limits your maximum liability for unauthorized credit card use to $50, so you can't be held liable for large charges that you didn't make yourself. With debit cards, you can lose up to $500 due to an unauthorized transfer, depending how quickly you report the problem, according to the Federal Trade Commission.

Rewards Programs

Some credit cards offer rewards programs that make it financially beneficial to use credit cards online. Rewards programs might offer cash back on all purchases or special rewards for certain types of purchases. For instance, eBay offers a credit card that gives rewards for purchases made on eBay and Paypal purchases.

Data Theft

One of the drawbacks of using credit cards for online purchases is the potential of data theft. When you shop at many different websites and enter your credit card information on each site, it increases the chances of your credit card information being stolen. Using an online payment service that doesn't expose your credit card information to retailers limits the chances of credit card data theft. Using an online payment service also saves you the hassle of entering your credit card information for each website that you use.

Accumulating Debt

Using credit cards for online shopping can be dangerous if you are an impulsive spender. When you shop with a credit card, you are borrowing money that you have to pay back later, so if you shop too much you could accumulate a large amount of debt. Online shopping makes it extremely easy to overspend and accumulate credit card debt, since you can buy almost anything you want at any time of the day. Shopping with debit cards or payment services that are linked to checking accounts ensures you won't spend more money than you actually have in your accounts.

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