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Posted: 6:00 a.m. Wednesday, Nov. 20, 2013

The places you should never use a debit card

By Clark Howard

ClarkHoward.com


Debit card account fraud is on the rise. I want to tell you the best way I know to protect yourself.

If your credit card is compromised, the harm to you is relatively small. You contact the issuer to report false charges and you may have to do some paperwork, but no money leaves your hands. With debit card fraud, however, there is money that leaves your hands. And you have to fight to get your own money back. Unfortunately, it's now taking longer and longer to get that money back.

Under the law, banks have 10 business days to give you your money back in the event of debit card fraud. Visa and MasterCard, however, have set their own standard of 5 business days if a compromised debit card has either logo on it, as most do. Yet I'm hearing from callers that the true wait time to get your money back is substantially longer than either 5 or 10 business days.

Now, I know debit cards are popular because people got in over their heads spending money they didn't have on credit cards. Debit cards, in theory, allow you to spend only what you have. But the problem comes if a crook cracks your debit card. Then you have no money to pay your mortgage, your car loan or to buy gas or food, among other things. Your checks start bouncing and, depending on your bank or credit union, the institution may not cover the bounced check charges that result from debit card fraud.

According to BankRate.com, there are 4 places you should beware of using a debit card at all costs:

  • Independent ATMs - You run the risk of skimmers. While skimmers can be found on bank ATMs, they're less likely because there are often security cameras in place. 
  • Pay at the pump - Skimmers aren't the only danger to your wallet. The gas station will put a big hold on your account that could cause your checks to bounce. If you must pay with debit at gas station, go inside and pay at the cashier.
  • When you're buying online - Credit card is a much better option. If you don't get your merchandise, you can do a chargeback during a 60-day window.
  • At a restaurant - Because there is such high turnover at restaurants, you don't want a dishonest employee to get hold of your digits.



What if you absolutely must use debit in your life? If you are someone who would be financially devastated if your bank account were emptied, I suggest you open a second account and tie your debit card to it. Then fund the second account only with money that's used for debit card activity, so your principal account won't be at risk in the event of a breach. That's the best way I know to protect yourself.

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