Recently, there’s been a lot in the news about database security breaches. From Target to Michaels to Neiman Marcus, it seems like any major retailer could be the target of a database breach.
And, of course, that puts your information at risk.
A few years ago, one of my credit card numbers was stolen as a result of the PlayStation Network breach. Having your credit card number stolen is frustrating enough, but having your debit card information at risk is even worse.
That’s one of the reasons why I almost always use a credit card when I go shopping now, whether it’s online or in person.
Credit Cards Don’t Provide Direct Access to Your Bank Account
One of the reasons I like the idea of using credit cards for my shopping is that there’s no direct access to your bank account when you use a credit card. This means that if someone charges your card fraudulently, the money doesn’t come out of your bank account. Additionally, you can get the fraudulent charge erased from your credit card account in as little as 24 hours (although it can take longer).
With a debit card, you don’t have that extra layer between your bank account and the fraudster. When your debit card number is compromised, the fraudster has direct access to your bank account. Even if you notify your bank quickly, and prevent future problems, the reality is that it could take up to two weeks to get your money back.
And it really is your money accessed by the debit card, so that reduces your spending power during that time. If you have automatic withdrawals for your mortgage payment and other bills, you could run into serious problems by not having that money in your bank account.
Debit Protections Aren’t the Same
Banks that brand their debit cards with MasterCard and Visa tout $0 fraud liability, but the rules are a little different under the law. While some banks treat debit cards like credit cards in terms of liability, not all of them do. In fact, several banks adhere to the minimums imposed by law under the Electronic Fund Transfer Act.
For debit cards, your protections are as follows:
- You’re liable for up to $50 if you notify the bank of the fraud within two days
- If you report the fraud within 60 days after the statement is issued, you’re liable for up to $500
- After 60 days, you can be liable for unlimited damages with a debit card
- Some banks provide credit-card-like protections if you sign when you pay, but won’t provide the same protections if you use a PIN instead
It’s important that you read the fine print and double-check with your bank to get the actual policy on debit card protections against fraud — since under the law, protection for credit and debit cards isn’t the same.
Do you think debit or credit cards are safer? Does this post change your mind?