It seems that paper checks are going the way of the VCR these days. Today, most purchases can be easily made by using your debit or credit card. And while they may look the same, a credit card and debit card offer very different protections for consumers.
With a credit card, you typically won't be liable for any unauthorized charges after it is lost or stolen - no matter the amount or how long it has been since the charges were made (although some credit card companies may charge a small flat fee). Often credit card companies will credit back the unauthorized charges within 7-10 days.
However, with a debit card, you must report an unauthorized loss or money transfer as soon as possible (sometimes within 2-5 business days, depending on your financial institution). If you're not prompt about the reporting, you may be liable for some or even all of the money stolen from your account.
For these reasons, there are certain times when using your debit card isn't such a good idea: Here are three:
At the pumpGas pumps have recently been prime targets for a practice called “skimming.” This is where small devices can easily scan your information without any type of encryption. To date, a lot of service stations have yet to deploy certain safeguards to protect consumers against this type of scam.
OnlineHackers are everywhere. But when you go into a physical store, you're handing your debit card over to a person to whom you want to do business with compared to sending your information out into cyberspace where anyone can be watching. Obviously, going into a store doesn't mean that your information is 100 percent safe, but it can be safer than making online purchases. If you're going to buy something online (and we all do) use a credit card - not your debit card. And consider keeping a credit card with a low limit such as $500 to use when shopping online.
Do you know how guarded you are when it comes to knowing where your purse or wallet is? Well, when you go to a restaurant, you give your debit card to a stranger who then walks away out of sight. While most people are honest, the crooks could be writing down your debit card number. Considering that most online purchases don't require a pin number, you may have just opened yourself up to a litany of fraudulent charges.
No system is foolproof. But when making purchases, be aware of the best methods in which to make them.
For more information on how to budget your money and prepare for your financial future, visit the Protective Learning Center.