Color of Money: Credit card vs. debit card - Wow Air's recent shutdown highlights why one is better than the other.

Michelle Singletary on

WASHINGTON -- My daughter came rushing into my office last week in despair.

She has a trip planned to Ireland in June. And the return flight she'd booked back from Dublin on the Icelandic budget airline Wow Air had just been canceled -- after the company announced without warning that it had ceased operations.

She wasn't just worried about finding another cheap seat. She had used her debit card to pay for her airline ticket. As a college student, she couldn't afford to lose the $350, she complained.

"I feel swindled," my daughter said. "How could the airline take my money knowing they may be going out of business?"

Her mama went into protection mode -- this time trying to help her figure out how to get her money back.

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.

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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."


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