Fraud Risk - Debit vs Credit Cards
 

I thought I would share some info regarding the U.S. laws as they pertain to fraudulent use of your debit card versus a credit card. There are some big differences in risk and it is important to be aware of them:

Credit cards are regulated by federal fair-credit laws, which generally limit consumer responsibility for losses to $50 for unauthorized use. Many card issuers waive even that. Moreover, fraudulent charges are the bank's and the retailer's headache, not yours.

But debit cards are regulated by the law that governs electronic fund transfers. While losses are limited to $50 for unauthorized use reported within two business days, any losses reported after two days are limited to $500. If you report a loss more than 60 days after the bank transmits a statement that includes an unauthorized funds transfer, the bank doesn't have to reimburse you. As a result, cardholders can be liable for losses up to the entire balance in the account and their maximum overdraft line of credit.

A growing number of banks are touting "zero liability" protections to promote debit-card use, but there can be exceptions. Card issuers Visa USA and MasterCard Inc. offer their "zero liability" guarantees only to consumers who use their cards with a signature instead of a PIN. That can be difficult at times because retailers often steer consumers to enter their PINs on keypads. The reason: Banks get higher fees from merchants when consumers use debit cards with signatures, rather than PINs. Some banks may choose to offer zero-liability protection to PIN users, too. J.P. Morgan Chase & Co.'s Chase bank, for instance, offers this protection to PIN-debit users if a fraud is reported within 60 days of receiving a bank statement.

Good to know, thanks for sharing the infos ! :cheers:

So, as a traveler, what would you bring in your money belt/wallet and what we be your ratio of using credit cards vs. debit cards.

For me, I would carry a debit card with the majority of the funds in the saving account versus the checking account, as well as 2 to 3 credit cards.

I would use my credit cards 100% of the time, if possible and pay it down with my cash when the trip is finished, getting airlines miles in the process and if there was ever a problem with fraud, it would be with the banks money and not mine.

Anyone else?

I would recommend only using your debit card to withdraw money from ATM's that appear to be with legitimate banks (versus shady, unbranded stand-alone ATMs) and not use it for any other purpose unless in an emergency.

I would eliminate or at least minimize use of the debit card to make purchases - particularly on-line, but also at restaurants, pubs, stores, etc. Either use cash (that you brought or took out from a bank's ATM) or use an actual credit card.

If you do have to use a debit card for a purchase, try to use the credit card option on the POS terminal so that it requires a signature. If you only use a PIN, you are potentially at higher risk.

Bottom line is that protection for fraud when using your debit card is not nearly as good as a credit card. Protect yourself!:cheers:

Excellent. That's how I feel with the protection. I will use the debit with ATM's abroad, but even then sometimes, I will take cash advances from a credit card sometimes.
My friend from Germany came over a year ago and was scared to use his credit card in Los Angeles. I asked "Why?" He said that is Europe, when you go to a restaurant and pay with a credit or debit card, some crooked thieves will swipe it in 2 machines as their ringin up your bill in the back or underneath the counter where the machines are. One machine for the business, and the other is their own private one that coworkers don't see that logs down your number, then the make a duplicate card with your information.
Better this happening on a credit card, than a debit card.

I have heard nightmares from people who got sucked dry of all of their cash, because of fraudulent debit card use. This guy gave up on debit cards after 2 rounds of fraud.

This is why I do most of my purchases with credit cards here, there, and everywhere:torch: .

And thanks for bringing this to our attention, Jamie:cheers: !

Thanks for the heads up, Jamie! This really makes me feel like I should get myself a credit card. :huh:

Right now I only have debits, but I do have most of my money in the savings as opposed to checking, as Tony said...and transfer funds over as I need them. I actually have yet to use my card while traveling - I've had cash only (and never had to withdraw) for all my trips so far!

In addition to cash I mostly use my bank cards when traveling but that's almost exclusively for ATM withdrawls only. Since I bank with a credit union, my fees are FAR less than what a normal bank charges. I have not yet financed any trips on credit. -_-

This is good info, LiveFree. A friend who worked at my bank told me the same thing before I started traveling. Make purchases on the credit cards, because of the fraud protection and general ability to protest charges and remedy errors more easily. Even if it's not fraud, and someone screws up, once the charge is made to your debit card the money is actually pulled from your account, and it takes much longer to get it back.

Also, I was reminded to use the ATMs less frequently when possible. Getting out several hundred at a time instead of spending cash for each day adds up and saves on fees.
:cheers: