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6 Places You Should Never Use a Debit Card

When the clerk asks you credit or debit do you look both ways? And even though a credit and debit card look the same there are different levels of protection. According to a federal law, if your credit card should be used to make unauthorized purchase if the card was lost or stolen, you’re liable for only $50. It does not matter what the original amount was and there are no time limitations for reporting the fraud. Many credit card companies won’t charge you the $50 because you are a valued customer.

However, with a debit card, you have only two business days to report any unauthorized loss and you may be liable up to $500. If you should wait more than 60 days, when you statement is mailed to you, there is a possibility you could be responsible for the entire amount.Even though a debit card offers no-interest – there are six places where you should never use them.

Convenience Store/Gas Stationsgas pump
In addition to ATM machines, gas stations are the most popular target of choice for “skimming,” where thief’s place a portable card-reading device inside the pump. When you insert a debit card and enter your PIN, the device (which thieves can purchased for less than $100) captures both the data from the card’s magnetic stripe and the PIN. Later, the device is retrieved, and the stolen data is used to create a duplicate card.

Why convenience store gas pumps? There are only a handful of manufacturers of gas pumps. It only take a key in the hands of a dishonest employee or thief, and the skimmers can be installed at another convenience store gas pump. Installing at night is the preference of these thief’s due to the gas pumps being unattended. If the pumps are older then you PIN is not encrypted. Here is a helpful hint: if you must use your debit card choose the ‘credit’ option instead of debit. This way you will not have to enter your PIN but it is still processed through your bank through the credit card network.

Purchasing Items Online
If you use your credit card you have the security if the retailer falls victim to a data breach as we have seen several of lately. Hackers can’t overdraft your bank account with a credit card and most offer protection perks. And, if you don’t receive your items, it’s defective or the wrong item, and the retailer won’t refund your money, it’s much easier to dispute those charges with a credit card instead of a debit card.

Your credit card may also offer an extended warranty and a few will offer a price protection for 90 days which issues you the difference if the identical item is sold for a lower price than what you paid. Some debit cards do offer this but takes more time for a refund and is a lot more hassle. This protection is an especially a good per for big ticket items

Restaurants
Restaurants are among the places where your card actually leaves your sight and servers can and do disappear to write your card information down to use in identity theft. Even though they do not have access to your PIN, they can use your card to make fraudulent purchases online. And, believe it or not, restaurants without sit-down service pose a threat. This is due to smaller restaurants keep your payment information on file and are not safeguarded.

hackedRetail Stores
Many, many months ago the FBI predicted there would be an increase in cyberattacks using sophisticated malware which targets point of sale (POS) systems like cash registers and card-swiping devices. It was this “memory-parsing” malicious software (also known as a “RAM scraper”) that was behind the well-publicized hacking of payment card information of some 110 million Target customers over the Christmas season – and responsible for nearly two dozen other attacks in the past year.

Yes, credit cards are also vulnerable in such POS attacks. With more protection, the credit card issuers always eats those losses (minus a possible $50 cap) should your plastic be hacked. And depending on when you report fraudulent use of your hacked debit card, you could be on the hook for the unauthorized activity.

Requiring a Deposit
Forgetting about the identity theft risk, credit cards are always a wiser choice for these types of transactions where your final bill is not certain. These examples are for rental cards, rented tools and vacation bookings. If you use a debit card, they will place a hold on your account for a greater amount under the assumption you will be paying a higher amount – i.e. hotel incidents like room service or returning your rental car without a full tank of gas. If you use your debit card for this, you would not have access on that additional amount from your bank account until the establishment removes the hold and reconciles your final bill. This could also result in an overdraft of your bank account. If you get gas at a convenience store they can also place a hold for debit card charges which is another reason to use your credit card.

If you are concerned about other scams, you can sign up for Fraud Watch Network where you will receive free email alerts with tips on resources to spot and avoid your identity being stolen. You will be able to keep up-to-date on the latest scams in your area.

moo thorpe headshotWhether you are selling your home or considering buying a new home, I can help you with your endeavor. Please contact me at 505.780.0310 or fell free to email me at moo@moothorpe.com and I would be happy to assist you.

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