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How To Avoid Debit Card Fraud: Protect Your Money

Debit card fraud: What do you need to know?

When a thief obtains your debit card number—and, in certain situations, your personal identification number (PIN), they might use it to make unauthorized purchases or take money from your account. 

This is known as debit card fraud. People can obtain your information in various ways, including dishonest employees and hackers using a retailer’s unsecured computer or network. Fortunately, spotting debit card theft doesn’t require any specialized knowledge.

Are Credit Cards Safer Than Debit Cards?

Debit cards don’t have some fraud protection advantages that credit cards do. The majority of today’s best credit cards provide zero fraud liability on unauthorized payments, meaning that if a charge is later shown to be fraudulent, you won’t be responsible for paying anything. Debit cards also have a liability cap for fraud, but you must report a lost or stolen card within two business days to qualify. 

Your obligation increases to 0 if you file your report after two business days but before 60. You are not responsible for unauthorized charges as long as you notify them within 60 days of getting your bill if your debit card number but not the actual card is stolen. You can decide that credit cards provide better fraud protection when comparing debit and credit cards.

The Difference Between Credit Cards and Debit Cards

When you purchase with a debit card, the money is nearly instantly deducted from your checking account to cover the cost of the item. When you use a credit card, the money will be charged to your line of credit, giving you more time to pay the payment because you will pay it later.

Making the perfect time to use each card can frequently be difficult. Consider utilizing your debit card for regular purchases since you will immediately see the money deducted from your checking account. You might use your credit card for larger purchases like a rental vehicle or hotel room so that you have money saved up by the time you need to make a payment.

When Is It Safer to Use a Debit Card?

You have a rewards debit card.

You might want to think about a debit card with rewards if your credit history makes it difficult for you to obtain credit cards. Rossman recognizes that debit card rewards are much inferior to credit card rewards. In actuality, very few debit cards provide any rewards.

If you can manage your finances better

Using a debit card may be a better approach to control overspending if you are having trouble paying off your credit card. Using a debit card for regular transactions makes sense if you have credit card debt to prevent accruing more. But you might not have the money, so that’s a bit of a catch-22.

You can keep merchant costs away.

Some small shops, internet merchants, and restaurants charge an additional fee when you pay with a credit card, but debit cards are not subject to these charges.

You require immediate access to money.

You can use a debit or credit card to get cash from an ATM if needed. When you use a credit card to make a cash withdrawal, the transaction is regarded as a cash advance, and you are instantly charged interest (often more than if you just carry a monthly balance). Cash advances can be costly; hence, most financial professionals advise avoiding them.

When Is It Safer to Use a Credit Card?

The following are some of the reasons people prefer using credit cards instead of debit cards:

You can contest deceptive transactions and fees.

The only way to lodge a dispute when you shop online with your debit card and are incorrectly charged for products or services is to contact the seller and communicate with them, which may be frustrating and time-consuming. As a result, you can save time and effort by raising complaints about a credit card directly with the issuer, who will then contact the merchant. 

For erroneous billing and fraudulent transactions, you can also register disputes.

You are safeguarded from theft and fraud.

Your debit card may occasionally be stolen, or data may sometimes be compromised. Your only option in these situations is to notify the bank and request that your card is blocked. Nevertheless, they might not credit you for the money used without your knowledge or agreement. A credit card, on the other hand, offers fraud and theft insurance. If you report a fraudulent credit card transaction within the allotted time, the issuer will instantly credit the appropriate amount. Your obligation is so diminished.

Your credit limit is not made up of personal funds.

A debit card is connected to your checking or savings account. As a result, you must pay for every purchase you make using this card from your own wallet. 

You will deplete your account of any funds it already has if a hacker or fraudster uses your card. You will have to wait many weeks while the financial institution looks into the incident and deducts the money from your account.

On the other hand, with a credit card, the issuer grants you a credit limit based on your income and creditworthiness, which you can use to make purchases or cover bills. This is equivalent to conducting trades with the issuer’s cash. Therefore, the lender will increase your credit limit once they identify the cause of the problem, even if your card is used fraudulently, and it puts your credit limit at risk.

How to Stay Safe When Using a Credit Card?

Keep Your PIN Secure and Protect Your Card

Do not keep your PIN and card in the same location. As soon as you receive the card, sign the back as well. It is much simpler to construct a false ID than to forge a signature, so never merely write “See ID” in the signature line. Doing so renders the card invalid.

Use the security features of your credit card app.

You can frequently configure a wide range of security safeguards in credit card mobile apps to guard against account fraud, such as:

Account alerts:

For “card not present” transactions, you may choose to set up SMS or email alerts (meaning online purchases). You can use this strategy when the balance or transaction exceeds a specific limit. Or you may just set up alerts for any transaction. This might assist you in identifying fraudulent transactions and swiftly disputing them.

2-factor authentication: 

Setting up two-factor authentication can prevent someone from accessing more information if they do manage to gain hold of the login information for your credit card account. It adds a second step, such as requesting a passcode through text or email, to ensure that you are the only person accessing the account and your login and password information. Avoid using the same login and password across several apps and websites as a best practice for security. Do not use the same login credentials for your credit card account on the websites or applications of other retailers.

Report Fraud Immediately

Report any unauthorized purchases or lost credit cards immediately to your credit card company. Your account may be frozen, preventing further purchases. You must immediately disclose any new accounts that have been opened in your name. 

If you’ve been the victim of fraud or identity theft, the Consumer Financial Protection Bureau includes a list of actions and contact information for the credit bureaus.

Never provide details on a call you didn’t place:

You should be extremely wary if your bank calls you and requests your account details. Your bank would never email you a link purporting to be a new version of its web app, call or text asking for information to verify your account or ask for password security details like the street you grew up on. It’s still possible for the number calling you to be a phishing scam, even if it seems to be coming from your bank.

What to do if someone has used your card

Keep an eye on your credit reports and statements.

It would be best if you kept an eye on your credit card accounts for a few months after you saw the initial indications of credit card theft. Check for any extra information, such as login credentials that may have been compromised. In that case, fraudulent purchases may continue to appear on your card statements for months after your card information has been stolen.

If you have a problem with how your bank or card issuer has responded, file a complaint.

The issuers of debit cards should look into the charges immediately (usually within ten business days) and take appropriate action (generally within three business days). Although it can take longer for your credit card, you are not required to pay the amount while it is being looked into. Additionally, you are entitled to view the findings of their inquiries.

Inform the police about the credit card fraud.

If you’ve established that you’ve been a victim of credit card fraud, you might choose to inform the authorities. Visit the IdentityTheft.gov website of the Federal Trade Commission to start this procedure. The website will next provide you with the option to submit an identity theft report, which law enforcement agencies use in their inquiry. Following that, you can follow up with your neighborhood police, as suggested by your creditors.

Change your passwords and check your credit card accounts.

The wisest course of action is to use care. Check all your other credit card accounts to see if they have also been hijacked once you have contacted your credit card company. It’s crucial to remember that even if only one card appears to have questionable purchases, you can never be sure where the fraudster received the information. You stay safe and make sure to update all of your PINs and passwords regularly.

Jason Rathman
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