Debit Cards: Much greater liability risk than credit cards:
-- Legally, your ultimate liability for fraudulent use of a credit card is generally only $50. And, when a credit card is fraudulently used, you are also only disputing whether you owe the bank money.
-- Unlike a credit card, if your debit card is used fraudulently, the thief robs your checking account. Potentially, all your money is drained out of your checking account. It could take the bank 10 days or more to investigate and refund your money. In the meantime--you could bounce checks to your landlord, credit card company, or mortgage company.
-- Worse, unlike a credit card, under the law, your debit card liability could be as much as $500, if you notify the bank more than 48 hours after you learn of the problem or even up to all the money in your checking account plus your maximum overdraft line of credit if you fail to notify the bank within 60 days (See Fed excerpt below). Under pressure from the state PIRGs, banks claim to have voluntarily limited debit card liability to $50. PIRG has received complaints from consumers whose banks have not honored the well-publicized alleged voluntary $50 limit. Let us know (uspirg@pirg.org) if you have lost more than $50 in a debit card dispute with a bank, savings and loan or credit union.
