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Key takeaways
- Debit cards are not the safest way to pay since they are directly connected to your bank account and do not have the same liability protections as credit cards.
- Using your debit card for online purchases, pumping gas, or at non-bank ATM locations can expose you to higher risks of fraud and theft.
- One alternative to debit cards is using your smartphone to make payments. These transactions are much safer as your card information is not exchanged.
Using your debit card is a great way to avoid spending more money than you have in your bank account and racking up credit card debt. And these days it’s never been easier to use your debit card. You can swipe your card at any store, kiosk, or ATM.
It’s convenient but unfortunately, it’s not always the safest way to pay. Swiping your debit card at a card reader can put you at risk of fraud. The latest scam is to illegally capture your debit card data through a process called skimming. Skimming costs consumers and financial institutions up to $1 billion per year according to the FBI.
Debit cards are directly connected to your bank account and do not have the same liability protections as credit cards. In fact, you could lose up to $500 if you don’t report your debit card as lost or any fraudulent activities within two days.
The good news is you can easily reduce the risk of fraud by knowing where not to swipe. Here are 8 situations where it can pay to leave your debit card in your wallet:
1. Online
The online world is rife with hackers and data breaches. This is especially true when you shop through social media. Without the right security measures, your card information can be easily compromised. Most debit cards do protect against theft after the first $50, but it’s a headache, and restoring your money can take up to 30 days. Instead of using a debit card online, opt for credit cards or secure payment gateways like PayPal or Apple Pay, which offer better fraud protection.
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2. Restaurants
When you hand over your card to a waiter, it’s out of your sight, making it easy for someone to run it through an illegal handheld reader and compromise your information. A lot of restaurants are now bringing contactless payment machines to the table eliminating this concern. If the place you’re dining in doesn’t do that, pay with cash or your credit card.
3. Gas station pumps
Gas station pumps are slowly being updated to accept secure chip or contactless cards but in the meantime, they remain an easy target for criminals to install skimming devices. These devices steal your debit card information and some even include a miniature camera to view your PIN as you enter it. To combat this, pay inside the station, use cash, or utilize mobile payment methods if available.
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4. Hotels
Hotels often put holds on funds to cover unexpected expenses, restaurant charges, or other fees. These holds can tie up significant amounts. If you’re using a credit card, you won’t notice it but if you use a debit card these holds can be problematic. Use your credit card for hotel bookings and check-ins. You can always pay the balance with another method when checking out.
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5. ATMs at non-bank locations
ATMs located in stores or remote areas are easy targets for skimming. Much more so than those located inside banks that are hard for criminals to access. Non-bank ATMs are less monitored and employees typically don’t know how to spot if its been tampered with. Plus criminals are getting better at disguising skimmers making them harder to detect. Always use ATMs inside reputable banks and inspect the card slot for any suspicious devices. If something doesn’t look like it quite belongs, use a different ATM.
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6. Recurring chargers
What happens if you forget to budget an automatic bill payment one month? Or if your former gym won’t stop billing you? If you have a credit card, you can easily dispute the charges. But if you used a debit card, you could accidentally overdraw your account and be on the hook for hefty overdraft fees. Use your credit card for recurring payments to provide an additional layer of protection.
7. Big-ticket items
If there’s an issue with the purchase, credit cards offer better dispute resolutions and protections than debit cards. Some credit cards even include extended warranties or auto insurance when you rent a car. Just be sure to pay off your balance so you aren’t stuck with interest charges.
8. Festivals and pop-up events
Temporary setups do not always have the best security measures, and crowded places increase the risk of theft or fraud. Carry cash or use secure mobile payment methods for such events. Also, don’t fall for fake tickets, an increasingly popular scam. Always buy your tickets from reputable vendors and use a credit card. This way you can dispute charges.
Use your smartphone to make payments
These days you can pay with your phone at the majority of retailers. All you have to do is link your payment information to Apple Pay or Google Wallet. When you use these digital payment methods your card information isn’t exchanged. Instead, they create a one-time code for transactions. Even if hackers get this code, it’s useless for any other transaction. You do have to make sure your phone remains locked, has a strong passcode, and consider enabling biometric authentication for added security.
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What to do if your debit card is compromised:
If you lose your card or notice suspicious activity lock your card immediately. You can usually do this through the app, but if not call your bank or credit union and they’ll help you. If your card’s been used, report the fraud to your bank within two days, and you can get your money back. Regularly check your bank account so that you’ll notice unauthorized transactions quickly and be able to protect yourself.
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Final Thoughts
The sad reality is fraud is always a possibility. Be careful where you use your debit card and opt for your credit card next time you shop online, book a hotel, or pump gas. As an extra precaution, set up mobile banking alerts that will let you know any time your bank detects suspicious activity. Being careful where you swipe and monitoring your checking account will help protect you against scammers stealing your hard-earned cash.
