Debit cards are ATM cards that allow you to perform transactions at stores using a PIN code or as a Visa or Mastercard “credit” transaction using a signature.
These cards provide easy access to your checking account. In the wrong hands, however, they also provide crooks and scammers with easy access to your account as well!!!
Recent Credit Card breach at Target
If you’ve seen the news in the past couple of days, you will have heard about the more than 40 million credit card numbers stolen from Target during the November 27 through December 15 timeframe.
For those of you who aren’t looking at your calendar… yes, the security breach started the day before Thanksgiving! Which means, if you took advantage of Target’s Black Friday specials, most likely your credit information has been compromised.
What this means for you?
Most likely, your credit card information is being bought and sold by thieves and scammers for about $20-$50 per card number.
In an article about the Target security breach on KrebsOnSecurity.com, Brian Krebs wrote:
There are literally hundreds of these shady stores selling stolen credit and debit cards from virtually every bank and country. But this store has earned a special reputation for selling quality “dumps,” data stolen from the magnetic stripe on the backs of credit and debit cards. Armed with that information, thieves can effectively clone the cards and use them in stores. If the dumps are from debit cards and the thieves also have access to the PINs for those cards, they can use the cloned cards at ATMs to pull cash out of the victim’s bank account.
The highlight above is mine and serves to reinforce that, if someone gets access to your debit card information, your checking account… and all the checks you’ve written… is in danger.
Credit Card vs. Debit Card
In simple terms, a credit card is a tool that allows you to borrow money from a bank, with the promise that you’ll pay it back either when the statement is created or over time, as allowed by the bank.
A debit card is a tool that allows you to access money that you have stored at a bank as an alternative to writing a check or withdrawing physical cash from a branch or ATM.
With a credit card, federal law limits your liability to $50 per card. It is common practice for banks to limit your liability to zero to encourage you to use a credit card as a primary source of spending. In the event of fraud, you call the bank and pinpoint which transactions are not yours and you are not liable for them while the bank does its research. While they are doing research on these transactions, your only concern is your available credit remaining (different between your credit limit and the balance on your card). Assuming you have a healthy credit limit and a normally low balance, there should be no issues.
With a debit card, you also have protection because of federal laws, however, the money has already left your account. This leaves you vulnerable to overdraft fees as checks previously written attempt to clear your account. Most of the time, the bank will reverse those NSF fees. However, you will also have to contact the companies/people you’ve written checks to and explain that it wasn’t your fault and plead with them not to charge you a returned check fee.
In the meantime, your account balance could be drained to zero and you may be left without access to any money in which to live on. The debit card process could take up to 2 weeks to get your money back while they perform their research.
In both the debit and credit card situations, your existing card will be canceled and a new one will be issued with a new card number. If you have any automatic payments hitting that card, those vendors will need to be notified.
When possible, avoid using a debit card. There is too much risk associated with a debit card and you get much better protection from a credit card.