Editorial Policy

Love your debit card? Follow these 8 rules

Allie Johnson

September 17, 2014

Credit card fraud is bad, but a fraudster who gets your debit card digits can drain your bank account.

To protect precious bank account funds, extra steps should be taken to keep that money safe.

A 2014 survey of debit card issuers by the debit/ATM network Pulse shows consumers are using debit cards more frequently, despite recent data breaches at large retailers involving debit cards. The Home Depot breach, confirmed in September 2014, could be the biggest yet, affecting as many as 60 million customers.

About 14 percent of debit cards were exposed to data breaches in 2013, up from 5 percent the year before, the survey found.

“If money disappears from your account, that could cause you to miss your next mortgage or rent payment — and it can take time to get it back,” says John Sileo, a data security expert and founder of the security site Sileo.com.

However, using debit cards instead of credit cards can help consumers budget and avoid debt, Sileo says. If you prefer debit to credit, here are eight ways to protect yourself from debit card fraud:

  1. Talk to your bank before fraud happens. Victims of debit card fraud who notify their banks right away can lose only $50 at most, according to federal regulations. However, most banks have zero liability policies, meaning you'd be reimbursed for all losses, says David Pommerehn, general counsel for the Consumer Bankers Association, an industry trade group. However, if you fail to notify your bank within two days of learning about the fraud, you could be held liable for $500 or more. So, it's wise to be prepared: Check your bank's policies ahead of time and ask what you should do if you spot a suspicious charge, Pommerehn says. Depending on your bank and the situation, you might have to file a police report or take other actions, and the bank might do an investigation, he says. Delays could tie up your cash, Sileo says: “I've seen people spend months battling to get the money put back in their accounts.”
  2. Set up a separate account for debit purchases. The more you use a card, the greater your risk of fraud, experts say. If you swipe your debit card for every magazine, cup of coffee and pack of gum, it's smart to set up a separate checking account to use for everyday purchases, Sileo says. You can transfer a few hundred dollars from your main account into your spending account every week or month, Sileo says. One tip: To truly limit your risk, make sure that account does not have overdraft protection and isn't linked to your main account, he says.
  3. Monitor your account. It's a good idea to check your bank account as often as you can, even if you just take a few seconds to glance at the balance when you're short on time, says Shirley Inscoe, a senior analyst with the market research and consulting firm Aite Group. Check daily if you can, she says. Sileo agrees, adding that consumers tend to check credit card statements more carefully than their bank statements. “Quick detection is the No. 1 way to stop fraud,” he says.
  4. Credit or debit? Choose credit. When you swipe your debit card at a store and you're given the choice to run the transaction as debit, where you enter your PIN, or credit, where you don't, choose credit. If you swipe as credit and there's a data breach, thieves might get your debit card number and other information, but they wouldn't make off with your PIN, Inscoe says. Without the PIN, they'd still be able to shop online or create a fake card with your card number, but they won't be able to use the ATM to get your cash, Sileo says.
  5. Avoid debit at certain merchants. Thanks to technology such as Square, which allows vendors to take credit cards via mobile devices, just about anyone can take cards. Consumers need to be very careful to use debit cards only at legitimate merchants, Inscoe says. In one case, a fraudster set up a flea market and used a skimming device as a fake card processor, she says. “All they were doing was swiping the cards to steal information,” she says. “They didn't even care about getting money for the junk they were selling.” So, don't swipe your debit card if you're not 100 percent sure about a vendor, she says.
  6. Know your ATM. Even consumers who use credit cards for purchases typically use debit cards to get money from ATMs — but that's not always safe, experts say. A criminal can install a skimmer, a device that captures card and PIN numbers, even on an ATM at a legitimate bank, Sileo says. Use the same ATM as much as possible, familiarize yourself with how it looks, and even snap a picture to refer back to, he recommends. “You'll be able to tell pretty quickly if something's just not right,” he says.
  7. When traveling, look for bank ATMs. When you're away from home, you might have to use an ATM you aren't familiar with. Some thieves buy old ATMs and set them up just for the purpose of stealing card information, Inscoe says. “There are all kinds of nefarious people out there, and used ATMs are readily sold to anyone who has the money,” she says. Such an ATM would probably be unbranded, or not have a recognizable name on it, she says. “If you're in a strange area, look for an ATM at a bank,” Inscoe recommends.
  8. Consider switching to credit when you travel. Planning a trip overseas? Use a credit card for purchases while traveling, Sileo says. Travel puts you at higher risk for card fraud, partly because you might not check your account as frequently while you're on the go, he says. Also, debit card fraud abroad can come with extra headaches and hassles, he says — for example, it might not be as easy to get a police report, if your bank requires that. So, use credit or, if you do use debit, check your account daily while traveling, Sileo recommends.

If fact, checking your account frequently is the best thing you can do, no matter where you are, Inscoe says. “If there's fraud and you only look at your account once a month, chances are all the money will be gone.”