NEW YORK (MainStreet) — With the recent Target payment breach, you have to be aware of certain factors before you swipe your debit card.
Target Corp. experienced the largest credit data theft since 2007. Cyber criminals were able to obtain payment information from approximately 40 million Target customers during the period of November 27 to December 15. This debacle of compromised information was second only to TJ Maxx, where approximately 45 million customers' information was jeopardized.
Debit cards have less protection
Unlike credit cards, debit card users are subject to weaker protection laws.
For example, using a credit card means you're liable for only a crisp Ulysses S. Grant bill.
"The Fair Credit Billing Act limits your liability to $50 [when using a credit card], and all four credit card networks -- Visa, Amex, MasterCard and Discover -- have zero liability policies so your liability is essentially $0," said John Ulzheimer, credit expert at CreditSesame.com.
By contrast, Ulzheimer says the Electronic Funds Transfer Act caps your liability for debit cards at $500.
With debit cards the sooner you report the loss, the less liable you will be.
"In the case of the Target breach, consumers should notify them [financial institutions] now and get a new card even if there has not been any fraud," Ulzheimer said. "Your liability is $50 if you notify them immediately and goes to $500 if you wait over 60 days."
Your hard earned cash could be on hold
Unlike credit cards, when using your debit cards, you are also putting your hard earned cash at risk.
"Using a debit card causes a hold for at least the purchase amount against the funds in your checking account," says Ulzheimer. "That hold causes those funds to be unavailable to cover other transactions."
Think twice before using debit
With debit cards, time is of the essence. The sooner you check your bank account transactions, the better. Consider setting up alerts to monitor your accounts in real time.
Robert Siciliano, online security expert for McAfee, warns customers to forego using the debit cards altogether and consider using credit cards instead. This way your funds are not tied up in case of fraudulent activity.
"My advice is to convert to credit card use from debit card use because of the more aggressive protections," said Siciliano. "Further, when a credit card is compromised, it's not your money, it is the bank's money so the sense of urgency is on their shoulders rather than on your shoulders."
--Written by Kemberley Washington for MainStreet