Debit card safety

Debit cards have different protections and uses. Sometimes they're not the best choice. 

Here are 10 places and situations where it can pay to leave that debit card in your wallet:

  1. Online.  Since the debit card links directly to a checking account, don't use a debit card online, you have potential vulnerability there.  If you have problems with a purchase or the card number gets hijacked, a debit card is "vulnerable because it happens to be linked to an account.  Also includes phone orders in this category.

    The Federal Reserve's Regulation E  (commonly dubbed Reg E), covers debit card transfers. It sets a consumer's liability for fraudulent purchases at $50, provided they notify the bank within two days of discovering that their card or card number has been stolen.
     
  2. Big-Ticket Items.  With a big ticket item, a credit card is safer. A credit card offers dispute rights if something goes wrong with the merchandise or the purchase, she says. With a debit card, you have fewer protections.  In addition, some credit cards will also offer extended warranty's. And in some situations, such as buying electronics or renting a car, some credit cards also offer additional property insurance to cover the item.
     
  3. Deposit Required.  When renting something and it requires a deposit.  This is where you want to use a credit card instead of a debit.  That way, the store has its security deposit, and you still have access to all of the money in your bank account. With any luck, you'll never actually have to part with a dollar.
     
  4. Restaurants.  In restaurants, you have so many people around.  The danger: restaurants are one of the few places where you have to let cards leave your sight when you use them. But others think that avoiding such situations is not workable.  The "conventional advice of 'don't let the card out of your sight' -- is just not practical.  

    The other problem with using a debit card at restaurants: Some establishments will approve the card for more than your purchase amount because, presumably, you intend to leave a tip. So the amount of money frozen for the transaction could be quite a bit more than the amount of your tab. And it could be a few days before you get the cash back in your account.
     
  5. You're a New Customer.  Online or in the real world, if you're a first-time customer in a store, skip the debit card the first couple of times you buy.  That way, you get a feel for how the business is run, how you're treated and the quality of the merchandise before you hand over a card that links to your checking account.
     
  6. Buy Now, Take Delivery Later.  Buying now but taking delivery days or weeks from now? A credit card offers dispute rights that a debit card typically does not.  But be aware that some cards will limit the protection to a specific time period.. So settle any problems as soon as possible.
     
  7. Recurring Payments.  We've all heard the urban legend about the gym that won't stop billing an ex-member's credit card. Now imagine the charges aren't going onto your card, but instead coming right out of your bank account.  Another reason not to use the debit card for recurring charges: your own memory and math skills. Forget to deduct that automatic bill payment from your checkbook one month, and you could either face fees or embarrassment (depending on whether you've opted to allow over-drafting or not). So if you don't keep a cash buffer in your account, to protect yourself from over-limit fees, you may want to think about using a credit card for recurring payments.
     
  8. Future Travel.  Book your travel with a check card and they debit it immediately. So if you're buying travel that you won't use for six months or making a reservation for a few weeks from now, you'll be out the money immediately.  Another factor is that hotels aren't immune to hackers and data breaches, and several name-brand establishments have suffered the problem recently. Do don't want your debit card information to sit in a system for four months, waiting for you to arrive.
     
  9. Gas Stations and Hotels.  This one depends on the individual business. Some gas stations and hotels will place holds to cover customers who may leave without settling the entire bill. That means that even though you only bought $10 in gas, you could have a temporary bank hold for $50 to $100.  

    The same can go for hotels, where there are sometimes holds or deposits in the hundreds to make sure you don't run up a long distance bill, empty the mini bar or trash the room. The practice is almost unnoticeable if you're using credit, but can be problematic if you're using a debit card and have just enough in the account to cover what you need.  At hotels, ask about deposits and holds before you present your card. At the pump, select the pin-number option, which should debit only the amount you've actually spent.
     
  10. Checkouts or ATMs That Look 'Off'.  Criminals are getting better with skimmers and planting them in places you'd never suspect.  So take a good look at the machine or card reader the next time you use an ATM, vending machine,  metro card machine or the self-check lane at a retail store. Does the machine fit together well or does something look off, is the machine not processing your payment?. Make sure it doesn't look like it's been tampered with.