Despite the coverage, McBride
has a caveat for consumers. "While many debit card issuers offer the same
protection against fraud as that of credit cards, it still means closing the barn
door after the horse is already out. It may take some time to restore the funds
to the account, unlike a credit card where the cardholder can withhold payment
on any fraudulent purchases."
Sloane also advises consumers to find out how their
bank processes debit transactions.
"Visa has extended zero liability, but the banks
have to agree. A transaction must go through the Visa or other network
in order to be covered. You have to ask your bank whether zero liability
applies to that debit card. Otherwise, they'll say you're exposed
to the FTC rules. What is not discussed much is how long it takes
to get the money back into the checking account rather than credit
to get money back
So what happens if a cardholder has a problem and
wants her money back?
"The process varies by issuer," Krattli
says. "Call the bank, let them know there's a discrepancy --
that they didn't receive what they ordered, didn't like it, etc.
A customer service representative will talk them through some of
the steps that will be taken. In most cases, they get the money
back in their checking account within five business days."
Sloane thinks consumer concern about loss will
continue to push the debit card business. "Zero liability hasn't worked itself
all the way out on the debit side, and the next phase will be offers of recovery.
A bank will say, 'We'll help you recover accounts.' Maybe five years from now
the banks will offer some kind of insurance policy for the best customers."
versus signature conundrum
As for which method of check card use
-- PIN or signature -- is most secure, consumers are bit schizophrenic. According
to a STAR/First Data study in 2005, 47 percent of consumers preferred PIN debit
because they felt it was more secure. But the December
2005 issue of the "Chicago Fed Letter," published by the Federal
Reserve Bank of Chicago, noted that "Cardholders perform twice as many signature-based
debit transactions as PIN-based debit transactions. Cardholders in the United
States performed 10.3 billion signature-based transactions and 5.3 billion PIN-based
transactions in 2003."
And with all that activity, only 20 percent of those
surveyed in the STAR/First Data study were aware that their check
cards have the same zero liability coverage as their credit cards
debit cards offer much in the way of convenience, with equal protection against
fraud and loss, they don't appeal equally to everyone," says McBride. "Consumers
who always pay their credit card balances in full will find that a rebate credit
card is far more attractive than a debit card due to the higher rewards and additional
float time on the money."
The Bankrate Check
Card Survey was conducted in January 2007.
The top five banks and top five thrifts in the
top 10 markets were asked about their check cards,
fees associated with cards, reward programs and
fraud and loss protection. These 100 banks are
the same group that Bankrate surveys regularly
to compile the National Index.
Check card use will continue to grow because consumers
find them an efficient way to manage money. Nevertheless, there
are still a few aspects such as daily usage limits, overdraft risk
and blocking that need to be considered. For an explanation and
tips on those items, read "Check
card problems to watch for."