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.

Hidden fees

Watch out for fees with a debit card. Some banks charge debit card customers a monthly fee, others charge a fee on each debit transaction and some charge a fee if you use a PIN for a purchase instead of signing for it.

Returns

Another potential issue with debit cards is returns. You may have trouble getting a refund for merchandise that you decide to return, because many retailers treat a debit card purchase the same as a personal check or cash. You could end up with store credit instead of a refund.

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.

Avoid overdraft

Keep in mind that it can be easy to overdraw your checking account when using a debit card. Write a check and you've got the register right there to enter the transaction. Use a debit card and you're relying on your memory to remember to deduct the purchase later. Devise a system of putting the receipt in a place where you know you'll be reminded to update your checking account register.

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.