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5 risky places to use your debit card

Person using debit card at gas station
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Your debit card and credit card might look identical, but there is a major difference between these two pieces of plastic: what happens if a criminal uses one of them.

Credit cards fall under the Fair Credit Billing Act, which limits your liability for unauthorized charges to a maximum of $50. And in most cases, you won’t owe anything thanks to zero-liability protection.

Debit cards, however, are a different story. They fall under the Electronic Fund Transfer Act, which spells out different limits based on when you report the unauthorized charges. Wait more than two business days to report those charges and you can owe up to $500. And if you somehow fail to notice the charges for more than 60 days, you might not be able to get any of your money back.

You can take some basic steps toward safeguarding your debit card. Here’s a rundown of where to avoid using it, plus tips on how to keep a closer eye on the card that links directly to your checking account.

1. Sketchy ATMs

Thinking about withdrawing cash from that ATM outside of the convenience store? Think again.

“Consumers should be cautious around ATMs that are isolated or not affiliated with a known financial institution,” says Bruce Dorris, CPA, president and CEO of the Association of Certified Fraud Examiners (ACFE). “Consumers should also be mindful to look for any attachment or device near the card swipe/insert as there may be a skimmer attempting to collect card information as well as the PIN.”

Skimmers can read all the information stored in the magnetic strip of your card when you swipe it. You’re better off using an ATM inside a retail outlet or other high-traffic, well-lit place.

2. Gas pumps

While gas stations are slowly updating their payment terminals to accept more secure chip cards, many pumps remain easy targets for criminals to install skimming devices.

“Consumers should especially avoid utilizing their debit cards at gas pumps given their heightened vulnerability to skimming activity,” says Jason Zirkle, CFE, training director at ACFE. “It’s much safer to pay inside, or to use a credit card at the pump, since credit cards have legal fraud protections in place for consumers that don’t exist with debit cards.”

3. Bars and restaurants

Would you ask a stranger to hold a chunk of cash while you enjoyed drinks or finished dinner? That’s kind of what you’re doing if you hand over your debit card to open a tab at a bar or let a server disappear with your card to process your payment. There are plenty of headlines of service staff stealing cards from customers. If you need to hand over a card to someone who will need to take it out of your sight, go with your credit card due to the enhanced liability protections.

4. Anywhere you feel slightly uncomfortable

Outside of food and beverage outlets, here’s a simple rule of thumb to follow anytime you’re making an in-person transaction that requires your card: If it feels suspicious, don’t take the chance.

“The basic rule of thumb for consumers and transactions of any sort is to use some basic common sense,” says John Buzzard, lead analyst, fraud and security, Javelin Strategy and Research. “For instance, if the clerk insists on handling your payment card when a self-serve payment terminal is readily available, it might be an indication that something unusual is at play.”

5. Online

The coronavirus pandemic has paved the way toward unprecedented numbers of people doing their shopping online. Wherever consumers go, criminals follow. TransUnion found a wave of phishing attempts, scams and identity theft targeting at-home shoppers throughout 2020. As you do more of your shopping online, Buzzard recommends using a payment method that allows you to skip entering your card number and personal details.

“If you are using a browser to purchase items, make sure it’s a merchant you trust that offers a payment option you feel comfortable with, like PayPal or some other encrypted payment option that maintains your payment card information without the need to key in data,” he says.

Use your smartphone to make payments to help outsmart fraudsters

You cannot buy everything from the comfort of your couch. More brick-and-mortar retailers offer payment options that do not require your physical debit card. In August 2020, data from the National Retail Federation showed that 56 percent of retailers accepted mobile payments, and that number seems poised to grow as more shoppers want to avoid touching anything in the wake of COVID-19. That’s good news for your card’s security.

“Please leverage digital wallets and all of the widely known ‘pays,’” Buzzard says. “Each time you make a payment using one of these methods, your payment card information is not exchanged with the merchant but rather with a stand-in token that makes up a safer encrypted transaction. You can speedily purchase gas at the pump using these methods as well.”

While the transaction will be safer, it’s important to remember that your mobile wallet is a goldmine for a potential thief. Buzzard stresses the need to follow the basics of smartphone safety.

  • “Enable ‘find my phone or device location’ in case you lose your mobile device,” he says. “If your device is missing you can locate it or wipe it clean remotely to protect sensitive information.”
  • “Everyone with a smartphone should have an automatically locking screen,” Buzzard adds. “There are really no excuses for not protecting your payment apps from criminals. Facial scans [and] fingerprint protections known as biometrics work splendidly to protect your information. You just need to use them.”

However, don’t let your mobile device lull you into the belief that your information is 100-percent secure.

“Mobile phones are susceptible to malware, which can steal your card information from your mobile wallet,” Zirkle says. “The vast majority of this mobile malware is downloaded via phishing, so be careful when clicking unknown links on your phone in texts or emails. Finally, once again, credit cards in a mobile wallet are always going to be safer than using debit cards due to the legal protections.”

Keep a watchful eye on your account

No matter how safe you are with your payments, the reality is that fraud is always a possibility. In addition to watching where you use your debit card, spend an equal amount of energy watching the activity in your checking account.

“The best thing you can do is monitor your own bank and credit card accounts weekly, if not daily,” Zirkle says. “If you spot any unusual transactions, verify them with your spouse or other account holders, then notify the bank or card issuer right away.”

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Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.