Under the Electronic Fund Transfer Act, your liability is capped at $50 if you notify your bank within two business days of learning that your debit card is missing. Wait more than two days and you could be liable for $500. Both Visa and MasterCard have a "zero liability" if your card is used fraudulently. The catch is that guarantee is good only if the transaction is processed over their networks. If not, then the liability terms are set by the institution that issued your card, and those terms would be equal to, or better than, the terms established under the EFTA.
When you make a purchase with a credit card you have the option of withholding payment if you're not satisfied with an item. That right is protected under the federal Fair Credit Billing Act, but this law doesn't apply to debit card purchases. The moral may be to use debit cards for small purchases and credit cards for big ticket items.
It's also a good idea to use credit instead of debit when buying online because, again, your rights during a dispute are considerably stronger with a credit card.
Be sure to read Bankrate.com's special report on debit cards "Goodbye credit, hello debit."
The next section gives a quick rundown of tips for using your debit card responsibly.
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