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First of all, I know there are financial gurus I really respect who disagree with me on this, and that's fine because I'm not giving you financial advice, I'm giving you cyber security advice: Don't use a debit card. Especially don't use a debit card at shady stores that don't require the chip reader (Think gas stations in the boonies and mom and pop shops that haven't modernized).
Here are my top reasons:
- Your legal liability is only $50 for a credit card fraud, but for a debit card, you can for sure get screwed (See tables below)
- There's no need to give direct access into your checking account
- If your card is compromised and someone spends all they can on your account, would you rather be unable to pay your mortgage, or have your credit card company upset at you for maxing out your card?
- If you do have to do a direct withdrawal, consider setting up a separate account, not your main checking
- Having your debit card and PIN is a great way for criminals to get cash, and once they have it they can continue to fund their malicious activity
- Getting the cash back is very difficult
- That's all, but to me that's enough
Your Liability, Debit vs Credit
Debit Card Liability
Here's a table showing your liability on a debit card:
If you report: | Your maximum loss: |
Before any unauthorized charges are made. | $0 |
Within 2 business days after you learn about the loss or theft. | $50 |
More than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you, | $500 |
More than 60 calendar days after your statement is sent to you. | All the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account. |
Credit Card Liability:
Here's a table showing your liability on a credit card:
If you report: | Your maximum loss: |
At any time | $50 |
From <https://www.consumer.ftc.gov>
Basically, you can see that the FTC has put all the burden on credit card companies, and very little on debit card companies.
The information provided in this article and accompanying material is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs.