Beware of lurking debit card dangers
In a time when we are all being vigilant in protecting our physical health, now might be a good time to recall the specific threats that come along with using a debit card.
With all the potential risk and trouble that can come with credit cards, there is a certain appeal to only being able to spend the money that you have. While it might feel like the responsible choice when it comes to spending habits, using a debit card poses its own set of potential dangers.
Simply put, there are less protections for debit card fraud and greater risks to all the cash in your bank account when using a debit card as opposed to a credit card. For instance, you typically have two days to report a lost or stolen debit card and still may be liable for up to $50 of fraudulent charges made to your account; If you report your stolen card after two days but before 60 days, you could be responsible for up to $500 worth of fraudulent charges. Additionally, you have 60 days to report unauthorized transactions if the card is still in your possession to prevent liability. On the other hand, according to the Consumer Financial Protection Bureau, under federal law “you are not responsible for unauthorized charges” made to your credit card. Also, if your actual credit card is stolen and used, there is a $50 cap on liability to you so long as the card is reported stolen to the card issuer.
Below is a list of hot spots for debit card fraud. When possible, it is best practice to use a credit card to pay for purchases in
any of these instances to help ensure your protection.
• Online — Especially now, when more and more of us are turning to online shopping to avoid the added health risks that come with venturing out in public, credit cards offer the added protection of waived liability if your information is stolen on phony or unsecured websites, but they also allow for chargebacks if the merchandise you purchased online never arrives.
• At the pump — Not only is this a hot spot for scammers to plant skimmers to collect your card information, but gas stations can put a large hold on your account for several days that can then cause future checks and debit purchases to bounce, resulting in exorbitant overdraft fees.
• Supermarkets — These are another hot spot for skimmers, especially on the debit card machines on the self-checkout lanes.
• Car rental counters —As a way to combat thieves using debit cards to rent and then steal cars, car rental companies are legally allowed to run a hard inquiry on your credit report, which in turn can be a major and unnecessary blow to your credit score. You can avoid this all together by renting with a credit card.
• Airlines and cruise lines — This is especially important in times of economic uncertainty, as paying for travel with a credit card, as opposed to a debit card, allows for chargebacks in the event that you don’t get the travel you paid for if a travel agency goes bust.
• Automatic/recurring payments and subscriptions — Credit card use is ideal for these situations because it is a lot easier to get your money back if the company or service who has been charging you continues to do so once your contract or subscriptions ends. Plus, you will not have to worry about a large sum of cash missing from your checking account and having to wait on a refund if this happens.
• Independent ATMs — These are not monitored as closely as your bank’s ATM and have a higher risk of being equipped with a card skimmer to steal your personal information.
If you have questions or need additional information about using your debit card, please call the BBB Education Foundation at 713-341-6141.