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Typically, debit cards that are used as “credit” are offered the same protections as credit cards. This means that if you use your debit card in a store and choose “credit” instead of entering your PIN number, you should receive the same protections as if you used an actual credit card. However, we do encourage you to double check the fine print your bank provides on this matter before assuming your debit card will receive those protections.
But here’s a scenario where your debit card is riskier than your credit card. If you withdrawal money at an ATM (or any store doing cash back) using your PIN number, you have additional risk. If someone steals your pin number with a skimming device at an ATM, then he has direct access to your money. This isn’t like credit card fraud with obnoxious charges you need to dispute. This is your hard-earned cash being taken directly out of your checking account. And if you aren’t careful, you might not be able to recoup your losses.
So, what can you expect if you are a victim of debit card fraud?
Timeline for Being Able to Get Your Money Back
If you are a victim of debit card fraud, you are responsible for the following:
- $0 if you report the loss or fraud immediately and the card has not been used,
- Up to $50 if you notify your bank within 48 hours of your lost or stolen card,
- Up to $500 if you notify the bank with 48 hours and 60 days of your lost or stolen card, and
- All of the fraudulent charges if you don’t notify the bank until after 60 days.
It’s important you don’t delay in reporting the fraud to your bank if you want to be able to get all of your money back. If you were the victim of theft because the crook skimmed your info and used your PIN, then you may be on the hook for the $50 because you couldn’t report to the bank before the card was used. You didn’t know it had happened until the strange transaction showed up!
It may seem unfair to be responsible for charges that you did not actually charge yourself, but to avoid that scenario and protect yourself, consider taking the following precautionary actions.
What You Can Do To Protect Yourself
To protect yourself against debit card fraud, you should do the following:
- Only use an ATM inside a bank (this will lesson the likelihood that a scanner is on an ATM)
- Cover your hand when you type your pin into an ATM (to protect yourself against any devices attached to the ATM from getting your PIN)
- Set up text alerts for each transaction over $0.01 on your card. This way you’ll be immediately alerted if a bogus charge is made
- Monitor your bank on a regular basis (so you can give notice of fraud immediately)
- Report stolen funds immediately (so you’re not responsible for the charges)
- Check-in annually with your bank as to the policies regarding debit card theft (know whether your debit card is specifically protected and to what extent)
While you can notify the bank by phone, it is best to get everything in writing. For purposes of the time requirement, notice is considered given when you put the letter in the mail. It’s even better if you send the mail certified. You can, of course, send notice by mail and call. Whatever you do, keep a record of your communications you have with the bank. This will put you in the best position if you have to escalate your problem.
Remember that if you take the actions listed above, you will be more protected than you otherwise would. Even if you didn’t do anything wrong, like in the example above, you can still find yourself stuck with fraud charges that your bank won’t reverse. These specific steps will help you protect yourself, even when you’re not at fault. This is particularly important if you use your debit card frequently.
Debit vs. Credit: How to Decide
Using a debit card forces you to keep your spending in check because you cannot spend more than you have in the bank. However, it may be riskier than using a credit card for the reasons described above. Discover, for example, now offers a Freeze It® on/off switch for your account. If you’re concerned because you’ve lost your card, you can temporarily freeze your account and Discover will not authorize new purchases, cash advances or balance transfers.
If you’re not sure which is best for you, ask yourself what do you value more – your spending being limited or the additional protections from fraud. If you can control your spending, then you may be better off with a credit card. If you are a spender, however, then take the additional steps listed above to make sure you fully understand your specific liability in the event of debit card fraud. If you feel your bank is behaving unethically and should be refunding you, then reach out to the Consumer Financial Protection Bureau to file a complaint.