- Debit cards might seem like the most convenient way to pay for many things.
- In some instances, however, paying with debit instead of credit or cash isn't the right choice.
- It can mean losing money and increasing your risk of fraud or identity theft.
- Independent ATMs, restaurants and self-checkout lines are a few of the places where you should never use a debit card.
Debit might seem great because there's no chance of spending more than you have or risking steep overdraft fees, but the stakes are also higher when it comes to fraud.
That's why debit cards are one of the things you should never, ever keep in your purse. For one thing, debit cards take cash straight from your bank account, while credit cards give you time to look at your charges.
"A credit card is more like a loan," says Mason Wilder, research specialist at the Association of Certified Fraud Examiners. "You have more time to dispute charges before any actual funds of yours go out."
Plus, the Fair Credit Billing Act only leaves you legally liable to up to $50 on a credit card, and the four major credit card companies all have zero liability, says credit expert John Ulzheimer, president of The Ulzheimer Group.
If you are a victim of debit card fraud, though, you could be out up to $500 — especially if you swipe at these risky places.
1. At independent ATMs
Thieves use all sorts of tricks to steal your identity. Sometimes, they sneak devices called skimmers into ATMs to steal your information when you stick your card in.
If you do need to get cash, your best bet is to go inside a bank instead of finding one on the street or in a convenience store, says Wilder. Officers and security cameras keep a watchful eye at banks, but there's no guarantee an ATM with less security is a prime spot for thieves.
"Even if it's not your bank, you're at a lower risk for fraud," says Wilder. "If you have to pay a fee anyway, it’s safer to use a bank's."
Here's how hackers steal information from ATMs without skimmers.
2. At gas stations
You swipe your card before filling your tank at pay-at-the-pump stations, so the gas station doesn't know what your final bill will be.
Because gas stations don't have anyone watching the card reader, they're a prime spot for fraudsters to plant a skimmer, says Wilder. To protect themselves, gas stations pre-authorize the maximum they'd expect customers to pay for gas—up to $100, says Ulzheimer. That cash doesn't leave your account, but it is put on hold so you can't use the money to pay until the station deals with your bill.
"The final transaction has to clear, and that might take a day or two," says Ulzheimer.
It's true that in some situations, you should never pay with a credit card. Yet without all the same protections as credit cards, debit is an even riskier way to pay with card.
3. At hotels
When you book a few days at a hotel, you aren't just paying for that night. The hotel will pre-authorize enough money to cover your whole stay, plus an extra deposit in case there are any damages. That money is put on hold, so even though it's still in your account, you can't use it to pay. It's a trade secret that hotels won't tell you.
Depending on how much money is in the account hooked to your debit card, you might not have enough money to keep swiping during your trip, says Ulzheimer.
"On a credit card, it's less of an issue because you have a high enough credit card limit that you can still use it," he says.
If you tend to overspend when you're out of town, these tips to save money on vacation can help regardless of your method of payment.
See the rest of the story at Business Insider