Singletary: Credit card vs. debit card: Why one’s better

I knew right away it would be difficult to get a refund. Using a debit card is like sitting in coach on an airplane. It doesn’t come with the first-class perks of a credit card.

Wow Air’s collapse, while awful for travelers who’d paid for upcoming flights, is a good opportunity to remind you of the difference between credit cards and debit cards.

If American consumers paid with a credit card for goods or services not received — such as a now-unusable Wow Air ticket — here are the protections under the Truth in Lending Act, according to the Federal Trade Commission.

Within 60 days from the date a bill was sent to them with the charge — whether or not you have paid it yet — consumers can dispute the item as a billing error under the Truth in Lending Act, says Juliana Gruenwald, a spokeswoman for the FTC.

“One important note is that 60 days starts when the bill with this charge was/is sent to the consumer,” Gruenwald adds. She recommends the following language when disputing the charge: “The item was not delivered as agreed.”

Consumers should send a letter — certified mail if possible — to the card issuer’s mailing address for billing errors ASAP and be sure to keep a dated copy, the FTC advises. If you are outside the 60-day period, you should still try to contest the charge as a billing error.

In the case of Wow Air ticket holders, “Some card issuers might honor the dispute due to the high-profile nature of this problem, and the airline clearly defaulted,” Gruenwald says. “But it might not work, and the card issuer might say, ‘Sorry but you are outside the deadline.’ If (ticket holders) already paid (off their credit charges), they become essentially an unsecured creditor in the bankruptcy.”

And just because you dispute a credit card charge doesn’t mean you get an automatic refund. The FTC has additional information related to disputing billing errors when you pay with a credit card at www.consumer.ftc.gov. Search for “Disputing credit card charges.”

The rules governing your debit card fall under the Electronic Fund Transfer Act. Unfortunately, if you pay with a debit card for a service or product that is never received, you are at the mercy of your bank.

“The Electronic Fund Transfer Act does not include ‘not delivered as agreed’ as a type of error that can be challenged for error resolution,” Gruenwald said.

However, you should still make an appeal to your financial institution, the FTC recommends.

For example, JPMorgan Chase proactively sent a notice to its customer-service representatives working in its call centers to alert them that Wow customers would probably be calling to dispute charges or make refund claims due to canceled flights.

“Credit card calls will go to the credit card dispute team, and debit card calls will go the debit card dispute team,” said Tom Kelly, a spokesman for Chase. “We will process the claims as services not received and submit them to the bank or company that processed the purchases for Wow.”

Kelly said that it’s “likely” that provisional credit given to its credit and debit card customers will become permanent over time.

It’s possible that other customers who used a debit card could get their money back even if there is no federal regulation requiring a refund. So, check with your bank, because sometimes they are more generous than they have to be.

In my daughter’s case, I urged her to call her bank, which immediately gave her temporary credit for the $350. They told her it would take up to 90 days to consider her claim for a full permanent refund.

There are a lot of advantages to using a debit card. But this situation with Wow makes a good case for using a credit card when booking an airline ticket or making a major purchase.