The newfangled check cards are great. You can use them to get cash, as debit cards and get cash back, and at anywhere the credit network is accepted. However, these cards have one inherent danger: THEFT.
Before, debit cards were “protected” by your PIN (at 4 digits, its not GREAT… but it’s something). However, these newfangled check cards only require a PIN for debit transactions. Guess what thieves do then? They simply press the credit button. There goes money from your bank account. OH NO!
You see with a CREDIT CARD you are legally ultimately liable for a maximum $50 when your card is fraudulently used. If the thief spent $1000 before you reported the card stolen you can only be held liable for $50 (assuming your issuer even MAKES you pay the $50). Anything after you report the card stolen is handled by the issuer.
With a DEBIT CARD since the money comes directly out of your bank account, YOU ARE LIABLE FOR EVERYTHING SPENT UP TO WHEN YOU REPORT THE CARD MISSING. In other words – all the money in your checking account plus whatever overdraft fees may result. You can limit your liability to $500 by reporting the theft within 60 days of the mailing of your statement, and you can further limit your liability to $50 if you report the theft within 2 days.
If you are going to lose a card, let it be a credit card. This means…
- Avoid carrying the check/debit card on your person
- Always use CREDIT cards online rather than check/debit cards
- Never let check/debit cards out of your personal sight (think restaurants)
- Request a check/debit card not be issued
- If you must get one, avoid activating check/debit cards you do not use