Think Twice Before Using That Debit Card

The Real Danger of Debit

The email that really made me think twice came from someone on the front line of identity theft. Here's part of what he had to say:

I am a Chicago Police Sgt ... and day after day my people have to make reports for all types of identity theft. You were mistaken in so many ways in the article. ... The first thing I tell people is never ever use a debit card. ...

When someone gets that card or just the number they can drain your checking account. Sure you can catch it if you check everyday, but by then the damage is done, and any other charges or bills that get paid automatically start bouncing. It takes time to correct the theft and by then the damage is done and the other bills still need to get paid.

Terry Takes it Back!

Obviously, I had some rethinking to do. So I called Visa, and here's what I learned.

Credit and debit transactions are governed by separate Federal regulations. Reg. E says consumers are liable for a maximum of $50 on any fraudulent credit card transaction.

But Reg. Z makes a distinction for debit transactions: Consumers are liable for a maximum of $50 if the fraudulent transaction is reported within two days (which means you should review your checking account online daily) or $500 after that time limit. It's even more if you've received a bank statement in the interim and did not dispute the fraudulent withdrawals.

Also, under Reg. E, banks are required to give you "provisional credit" within 10 days while they investigate your situation. But those 10 days could be a nightmare for people living paycheck to paycheck. That's what the police sergeant was pointing out.