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BBB ON SENIORS Don’t ignore potential dangers of debit cards

December 21, 2018

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, we often forget or, if you are like me, don’t even realize the potential dangers that come with using a debit card.

Simply put, there are fewer 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.

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.

Online — Not only do credit cards offer the added protection of waived liability if your information is stolen on phony or unsecure websites, but they also allow for chargebacks if the merchandise you purchased online never arrives.

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.

Furniture and appliance stores — You should especially be sure to use a credit card instead of a debit card if purchasing furniture or appliance and waiting on delivery as to decrease the risk of it not being delivered.

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 that 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.

Restaurants — Establishments with high turnover rates leave you at greater risk for dishonest or disgruntled employees to steal your debit card information, and less recourse to recover fraudulent purchases made with your stolen information.

If you have questions or need additional information about using your debit card, call the BBB Education Foundation at 713-341-6141.

Melissa Ramsey is the BBB Education Foundation columnist. For more information, call 713-341-6141.

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