How to Protect Yourself When Using Debit Cards

The Debit Card

Photo: http://www.flickr.com/photos/57519914@N00/

A major part of banking today is the debit card. It’s a great tool for people who want a card that is directly tied to their bank account. Most cards come with one of two safeguards. Either you are holding “credit” up to the amount you have in your account, or you have “overdraft protection” along with the account. In the first instance, you will never incur overdraft fees because a purchase that is over the available amount will simply be denied. In the second instance, you pay a certain monthly fee so that you don’t incur the forty-dollar overdraft fee you would normally get if you purchased more than is available in your account. Either way, the debit card is a great alternative to the credit card.

How Safe is the Debit Card Regarding Fraud

There are some added precautions, however when using a debit card. With credit cards you normally have a built-in safeguard against fraudulent purchases. If you lose your credit card or it is stolen, and then the thief goes on an immediate shopping spree, you can dispute the charges and most likely won’t have to pay the cost. On the other hand, if your debit card is stolen and the same thing happens, you may be in some trouble. According to law, you have two days to report the card missing. If you make the deadline, you are only liable for up to $50 of the charges. On the other hand, if you wait for 60 days before you catch the problem or dispute it, you could be responsible for the total amount. For this reason it is important to know the differences in having a credit card and debit card when it comes to fraud and liability.

Tips to Protect Your Debit Card

Here are some tips on how to handle debit cards and how to protect yourself.

1. Sign into your account and check activity daily. With debit cards your time is limited to dispute charges. Make sure you don’t put yourself in jeopardy by not checking activity in a timely manner. This is the best way to safeguard yourself against problems.
2. Never respond to emails from your bank requesting account verification. This is called “phishing.” Third-party scammers set up these emails in the hopes that you will provide your log-in information. Then they use that information to gain access to your account. Always bookmark your bank’s website and access it from that link only.
3. Tell your banking institution to set up account alerts. These can be notifications if a debit charge is over a certain limit, or if your account balance falls below a certain level. You can then look in to the charge and either authorize it, or decline it. This comes especially in handy if more than one person has access to the account, for example a minor or a spouse.
4. If you are traveling, don’t log into your account at the hotel. This may sound odd, but you never know what security, if any, the hotel has. There could be a compromise in the system that allows outside parties to divert your information for their own use.
5. Be sure you know what your bank’s rules are in terms of fraudulent charges. Some banks will tell you upfront that unresolved disputes in charges to your debit card are ultimately your responsibility. Other banks will work with you if your information is compromised and not hold you liable, or at minimum not hold you liable for the full amount. Read the fine print of your agreement so you know what the procedure is.

In the end, debit cards are great tools to have and use. You need to be aware, however, of the distinct differences between the debit and credit cards. Once you understand how debit cards work, you can take the necessary precautions to make them work for you.