Shopping: The perils of debit cards

Leave your debit card at home, said Danielle Douglas in The Washington Post. If there’s one thing consumers can learn from Target’s recent data-breach debacle, it’s that not all plastic is created equal. “Credit cards are covered by the Truth in Lending Act, which places the maximum liability for fraudulent charges at $50” and “offers dispute protection and fair credit billing that allows you to stop payment on purchases,” but debit cards don’t get those protections. They are governed by the Electronic Funds Transfer Act, which protects you from liability only if you report the loss or theft of your card to your bank immediately—and before it’s been misused. If you drag your heels, your liability can jump to $500 after three days. “If 60 days pass and you say nothing, well, kiss all that money goodbye.”

And that’s not the only disadvantage of debit cards, said Yahoo.com. “Fraudulent charges on a credit card can be reversed in 24 hours or less, but it can take up to two weeks to have funds restored to a debit card account.” And since using a debit card requires you to enter a PIN, it can be riskier to use one, especially at “outdoor or freestanding ATMs and gas pumps,” where the terminals “are more susceptible to being outfitted with skimming devices, which are affixed to card slots and collect personal information when the card is used.” In restaurants, too, “employees have the opportunity to steal your info,” which is also vulnerable on poorly secured commerce websites. Check with your bank to understand its protection policies, and notify it—in writing—when you spot something fishy.

Just be smart about using your debit card, said Ron Lieber in The New York Times. Monitor your balances daily, and keep spare funds in an unlinked account to limit losses from “a big fraudulent charge.” As data breaches become more common, beware that “thieves who have both card numbers and email addresses may try to send messages pretending to be from the card company in an attempt to phish for additional information,” such as Social Security numbers. And if an email or website raises any red flags, call the company directly. Ultimately, “cards still offer more benefits than drawbacks for people who don’t get into debt.” And by taking the right precautions, “it’s easy enough for most people to drastically bolster their odds of avoiding the worst of the problems.”

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