The ins and outs of debit cards |
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"That's a good thing to compare ... A lot of
times you have to keep a minimum amount in your account. Those are
all things you have to consider."
World travelers should also take note. Visa and MasterCard have
a standard 1-percent charge on foreign purchases, but credit issuers
and banks often charge an additional
fee, usually 2 percent, which adds up to a 3-percent total charge
on foreign purchases.
PIN is the best protection
Some consumer experts urge people to choose PIN transactions only.
With a PIN-based debit card you have to know the PIN number to make
a purchase. With a signature-based debit card, anyone could pick
up the card and use it.
"Anyone can sign your name. Clerks in
stores aren't handwriting experts," Grant says. "That's
why it's a good idea to get a debit card that can only be used with
a PIN number. It may limit the number of places you can use it.
But that's the tradeoff you make for extra security."
Grant needed that "extra security" when her wallet was
stolen. The thief had her PIN-based debit card but not the PIN number.
So her checking account was safe.
"That was a big relief for me," Grant
says. "It's a much more dire situation than your credit card
being stolen. The thing that gives you the most protection is having
a debit card that can only be used with a PIN number."
Federal safeguards
You do have some federal protections if a thief gets hold of your
debit card and goes shopping.
It's not so bad if you act fast. Under the Electronic Fund Transfer
Act, your liability is capped at $50 if you notify your bank within
two business days of finding out your debit card is missing. Wait
more than two days and you could lose as much as $500.
"The liability is frightening," Garman
says. "You're liable. You've got two days to do the right thing."
If you discover an unauthorized charge on a bank statement, you
may be on the hook for as much as $500, and that's provided you
contact your bank within 60 days.
If you wait longer than 60 days, you're stuck paying
every cent of a thief's spending spree. You could lose everything
in your checking and overdraft accounts.
In 2000, both Visa and MasterCard extended their
zero liability protection for credit card customers to debit card
customers as well. So in most circumstances, a debit card customer
will not pay a penny for unauthorized purchases made over their
networks with these debit cards.
However, these are voluntary measures and could change
at any time. Thus far, there is no equivalent law protecting consumers.
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