The recent Target Corp. payment data breach impacted more than 40 million customers and raised an interesting question: Which is safer, debit cards or credit cards?
Credit card users have more protection: They are only liable up to $50 for fraudulent activity, according to the Federal Deposit Insurance Corp. (FDIC). That is true regardless of how long it takes you to discover the transaction.
By contrast, with debit cards, time is of essence. Users should check their bank transactions as soon as possible, since debit cards users are only liable for $50 if potentially fraudulent activity is reported within two calendar days after you discover the transaction, according to the FDIC. However, after two days, users could be liable for at least $500, and possibly more.
When swiping a debit card, keep in mind that you are putting your entire bank account at risk. Therefore, if you fall victim to a payment breach, it puts much of your hard-earned savings at risk, such as the cash you earn from your paycheck.
Here are a few tips to protect your debit card:
- Set up alerts through your financial institution so you are notified each time your account is used.
- Consider using a credit card for shopping, as it offers better protection.
- If you prefer to use a debit card, open a separate account linked to the card. Then, keep that account funded at relatively low levels. That way, you will not suffer major financial damage if your card is used fraudulently.
Remember to remain vigilant. The key to protecting yourself is keeping an eye on your finances.
Kemberley Washington is a certified public accountant and professor at Dillard University at New Orleans. She writes a personal fiance blog at kemberley.com. Follow her on Twitter or connect with her on Facebook.