Debit or Credit_Who Pays Interchange Fees_II
Risks of Debit Transactions with a Plastic Card
When you buy something and choose your payment to be done by debit transaction, you’ll have it done online by entering your personal identification number (PIN). While this method of payment is sometimes more preferable than credit transaction and helps to avoid overdrafts, it also bears certain security-related risks. When you enter your PIN number, you expose yourself to the risk of this code being discovered by somebody else. A hidden camera or thieves may see the numbers you enter on the keypad, or the retailer’s device may give up your PIN (accidentally or not). Through this compromised PIN scammers will get direct access to your checking account and are sure to drain it, leaving you with no means to foot your bills. Your account is protected in such cases, but until the issue is resolved you will have to go on without this money.
Protection of your rights
Debit cards are subject to more risks than credit cards. Your liability in case of fraudulent use of your credit card is limited to $50, and it’s not your money that the thief spends but those of the bank. In case of theft from your credit card account your checking account remains intact and you don’t have to face any overdraft fees or bouncing of important checks. Provisions of Federal Reserve and Federal Trade Commission (FTC) provide protection of your rights in case your debit card was used by a thief. In order to recover the lost money you should act fast:
•If you notify your financial institution (the issuer of your debit card) about theft or loss of your code or card within two business days after you became aware of the case, your loss will be limited to $50. If you fail to notify your card issuer within the mentioned period of time, you can lose up to $500.
•If you fail to report an unauthorized transfer within 60 days after your statement is mailed to you, your loss on transfers made after this 60-day period will be unlimited. In such a case you’ll lose not only all the money in your account but also your maximum overdraft line of credit, if you have one.
