We all know that some view credit cards as straight up evil. They are tools of debt! They have high interest rates! However, credit cards also come built in with some nifty protections. Additionally, you can earn rewards with your credit cards, providing you with cash back, discounts and other perks. Some insist that debit cards can be just as good, with some limited liability for fraud, and the same convenience of carrying around plastic. However, the recent case of the Michael’s PIN pad theft reminded me of how vulnerable we are with debit cards.

Same Protections as Credit? Not Exactly

Supporters of debit cards point out that those using cards branded with major credit card company logos come with some protection against fraud. However, the protection isn’t quite as good as what you get with a credit card, which is straight up limited to $50. Many debit card issuers claim that they have a $50 liability limit, but what they fail to mention is that law only requires that $50 liability on debit cards for two days. After two days, your liability increases to $500. And, after 60 days (although if it’s taken you this long to figure it out you might have other problems) you are liable for everything.

When your debit card data is stolen, and used, that money is coming straight from your checking account. That means that other transactions you have pending, such as automatically paid bills, might be returned — with fees. The hassle, when your debit card is stolen, becomes quite large, since you will have to wait for the bank to investigate your case, and determine whether or not your debit card was used with authorization, or used fraudulently.

When your credit card is used fraudulently, you call the credit card issuer, and have the charges removed. You may still have to jump through a few hoops to prove that the charges were fraudulent, but the money isn’t missing from your checking account. Under normal circumstances, as long as you pay off your credit card balance each month, there should be minimal problems if someone uses your credit card fraudulently. Plus, with your credit card, all you need to do is call up and have a new card, with a new account, issued quickly and easily. You have to let automatic payment collectors know about the change, but it’s relatively painless. With a checking account, you have to close the account, open a new one, and go through a great deal of hassle.

Protecting Yourself

Recent security breaches truly have brought to light some of the ways that our personal payment information is vulnerable. From swiping your debit information right from the PIN pad to ATM scams to breaches at major gaming networks, you never know when your information is at risk. As a result, it’s important to protect yourself and know what’s going on with your accounts. Spot check your financial accounts regularly, to check for problems and fraudulent charges. If you use your debit card frequently, it might mean checking every couple of days to limit your liability.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.