Debit cards do not provide the same protection as credit cards when lost or stolen. As a result, money experts recommend not using a debit card in these situations:
- When buying airline tickets; if the airline goes out of business, you may have no recourse for a refund.
- Non-bank ATMs are more likely to have skimmers that steal debit card information.
- When making a gas station purchase a hold may be put on funds in your bank account, which could result in Bottom of Forman overdrawn balance when trying to make other purchases.
- Use a credit card for online buying for stronger legal protection to dispute a charge.
- In restaurants with high turnover, a dishonest employee may get access to your card number; again, a credit card provides more protection.
- When buying appliances a credit card may give you an extra warranty, which would not be
available with a debit card.
With a debit card you can be responsible for up to $50 of unauthorized transactions if you report a lost or stolen card within two business days. Then, your liability can be as high as $500 for fraudulent charges if you don’t report the situation within 60 days after receiving your statement. After that, you have the potential of unlimited losses for unauthorized use of your debit card. In contrast, with a credit card, you are not responsible for unauthorized charges of more than $50.
Consider only using your debit card to withdraw cash to make purchases. Since not everyone will take a cash-only approach to control spending, there is another action to protect yourself. Use a second checking account for your debit card. Fund this second account only with money that you plan to use for debit card activity. Then, in case of a lost card or fraud, you would only lose the smaller amount kept in that second account with your main checking account not at risk.
For additional information on debit cards, click here.
Teaching Suggestions
- Have students survey several people to determine common uses of debit cards.
- Have students create a podcast to warn others of the dangers associated with debit cards.
Discussion Questions
- Why should consumers become more aware of the potential dangers of debit cards?
- What actions do you take to protect your debit and credit cards?