Our Thinking

The Debit Card Conundrum

Posted by Sherri Collis on May 19, 2014 3:00:12 AM

You can’t miss the headlines announcing that our data has been breached, from credit card information and social security numbers to other personal information. Each day, there are more reports of our personal information being taken and used against us.

Were YOU personally affected by the Target breach? Michaels / Aaron Brothers? Neiman Marcus? AOL? Others? How many credit cards have you had replaced in the past year or two? Personally, I’ve lost count.

I was talking to my neighbor recently, and they were telling me about their credit card being breached. Someone got their credit card information and charged purchases to their card. Interestingly, instead of the charges being made outside of the state, as I usually see it happening, these purchases were being made at places where they actually shop frequently—literally in their area of town.

Sherri-1While the following scenarios are not desirable, if you had to pick one, which would you select: having your credit card breached or having your debit card breached?

What’s the difference? Well, if you use a credit card and it’s breached, you can report it and the charges will be taken off your bill. At no time is any money out of your pocket for this fraudulent use.

If you use a debit card and it’s breached, the money is immediately taken from your account, and you now have to work with the bank to get your money back after proving the fraudulent charges weren’t yours.

Thus far, I haven’t found it difficult to prove fraudulent charges weren’t mine, and have had no trouble getting fraudulent charges off my bill. In my neighbor’s scenario above, it would be more difficult to prove those weren’t theirs—this card had been legitimately used in the very places where the fraudulent charges were made. Due to the location of the charges, it may have taken longer for them to be reimbursed.

Now think about this:

  • How would it affect you personally if it took the bank a few days to reimburse your account for someone else’s shopping trip?
  • Would that answer change based on whether you had just sent your mortgage payment?
  • Do you use your debit card to make purchases? Where do you use your debit card?

I often hear that people only use their debit cards to get cash at ATMs, and they don’t use them anywhere else.

Do you know that you can request the bank to issue a “non-branded” debit card that can only be used at an ATM and inside the bank?

I recently learned about this “non-branded” debit card, and since I only use mine at ATMs, I decided I had to get one of these! In the process of obtaining one, I learned that different banks have different policies associated with the issuance of these “ATM cards,” but they are attainable—and safer to use than a regular debit card!

I also found that when I asked for a non-branded card that could only be used at ATMs, I was placed on hold numerous times and re-directed to different personnel and departments for responses. Apparently, this hasn’t become a popular request for banks’ call centers, and it took some escalation to local branches to find answers, perhaps because the banks think that it’s a “value-add” to include a Card Brand on the ATM card so that it can be used as a credit card.

Today, consumers have to continually keep the security of their information in mind, and take precautions to protect themselves from others who make it their full-time job to attempt to steal your personal information. In that light, here are just a few things to keep in mind:

1. Don’t use your debit card as a credit card. Even better, don’t HAVE a debit card that can be used as a credit card – if you can use it that way, so can a hacker!

Sherri-22. Pay attention to your statements. I received a paper statement last week in the mail that contained my full credit card number on both the statement and the invoice section of the bill that you return to them for payment processing.

  • Do your credit card statements contain your full credit card number?
  • Do you store those statements in a secure place?
  • When you no longer require those statements, do you securely destroy them (i.e., use a shredder)?
  • Were all the charges on the statement yours—and did you confirm them?

3. Protect your information! Before providing your personal information to anyone, THINK.

  • Do they have a real need for your information?
  • Are they asking you to provide your sensitive information in a secure manner?
  • Is your personal information necessary for what you are trying to accomplish?
  • What is their need to have the information they have asked you to provide?

4. Use your credit card! It’s not only giving you the ability to use someone else’s money for one month, but if you select your card well, you can receive airline or hotel points, or you could receive a percentage of your charges each month based on what you spend. You can then opt for that percentage of money you get back to be transferred directly into your savings account each month. Using your credit card also helps build your ability to borrow money when truly needed, and helps to build your credit score so you can get less expensive interest rates on loans (e.g., mortgage, vehicles, etc.).

Everything has a disclaimer these days, right? Well, my disclaimer is that carrying a credit card balance is not being advised here when I say use your credit card. This advice is to use the credit card to the limit of what you can pay off each month, and do so timely, so that you do not retain a balance and thus incur fees.

I’ll leave you with one other thought to ponder. I heard something from the FBI that I found interesting. I would personally have thought criminals would be looking to breach cards of those who are more affluent. The FBI said it’s just the opposite – criminals target the less affluent. Why? Glad you asked. It’s because the affluent check their statements regularly and confirm each charge; the less affluent don’t check their statements as closely.

Be careful out there!

Your information is extremely valuable on the market!

Just because you can’t see the bad guys doesn’t mean they can’t see you!

You are not exempt!

 

Topics: Security

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