The Pros & Cons of Using Debit Cards

Learn how to protect yourself from debit card fraud.

Laura Adams, MBA
5-minute read
Episode #82

Debit Card Fraud--Report Lost Cards Quickly to Limit Your Liability

Your liability for misuse or theft of a debit card under the Electronic Fund Transfer Act is very different. It completely depends on when you report the loss. When it comes to debit card fraud, please remember that you must act very quickly to give yourself as much protection as possible.

If you report a debit card loss before it's used without your permission, your liability is $0, just like with a credit card. But if you wait to report a stolen card or theft of your debit card number, your financial risk increases as follows:

· Your loss is limited to $50 if you notify your card issuer within two business days after discovering your loss.

· Your loss is limited to $500 if you report it within 60 days after your account statement was mailed to you, but

· Your liability if unlimited if you miss the 60 day deadline! You could lose all the money in the account linked to your debit card plus any overdraft fees and penalties.

Protect Yourself from Debit Card Fraud

So, what can be done to lower the risk of using a debit card? Well, I strongly recommend using debit cards only for smaller purchases from trusted merchants. It's a good idea to never let the card leave your sight during a purchase. Illegal electronic skimmer devices are very small and can easily be hidden and quickly used by identity thieves to copy your information. When making a big ticket purchase or buying over the phone or Internet, always use a credit card.

Here are some additional tips that can save you lots of potential frustration and grief:

· Sign the back of your cards as soon as you receive them · Don't carry cards with you that you will not need

· If possible, carry cards separately from your wallet

· Never give a card number over the phone unless you really trust the person or company

· Never e-mail a card number to someone or give it in response to an e-mail solicitation · Never sign a blank credit or debit charge slip

· Never loan a card to anyone

· Draw a line through blank spaces above the total on any credit or debit slips to avoid them being altered

· Make your Personal Identification Number something unique that a smart thief couldn't easily figure out

· Never create a Personal Identification Number that match your address, birthday, social security number, phone number, or any other number that could possibly be linked to you

· Never give your Personal Identification Number to anyone and do not keep it with your debit card

· Keep your debit card receipts in a safe place until you can match them against your account statement each month, then destroy them

· Check your homeowner or tenant insurance policy to find out if it includes any liability for card fraud


I want to say a big thank you to Grammar Girl for bringing me into the QD Network. And another thank you to Andrew Horowitz for doing such a great job as guest host.


I'm glad you're listening, and I hope to read your comments and money questions at money@quickanddirtytips.com. If you forget my email address, just go to quickanddirtytips.com for all contact information and show transcripts.

Chi-Ching, that's all for now, courtesy of Money Girl, your guide to a richer life.

Debit Card image courtesy of Shutterstock


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.