Should you be afraid of your debit card?

Funny that this issue has come up a couple of times today. Both My Dollar Plan (25 Reasons to Love Credit Cards) and Blueprint for Financial Prosperity (Your Take: Why Use Debit Cards) wrote articles that touched on the lack of debit card fraud protection compared to credit cards.

I’m a little surprised that people are afraid to use a debit card due to fear of fraud or theft. According to Visa, you get the same fraud protection when you buy things with your Visa debit card-

*Visa’s Zero Liability policy took effect April 4, 2000, and is a great improvement on the previous policy. The former policy required that you report fraudulent activity within two business days of discovery. After this two-day period, you could be held responsible for up to $50 of the unauthorized charges. With the new Zero Liability policy, you’re no longer required to report fraudulent activity within two days and you’re not responsible for any fraudulent transactions made over the Visa network.

The Zero Liability policy covers all Visa credit and debit card transactions processed over the Visa network—online or off. The only transactions not covered under the Zero Liability policy are commercial card, ATM, and non-Visa-branded PIN transactions.

For transactions on other networks, the liability decision is left to the financial institution that issued your card. The issuer has the option of extending the same protections afforded by Visa’s Zero Liability policy.

You may also have more protection offered from your bank. I primarily use a WellsFargo Visa debit card right now and here is what they do on top of the Visa Zero Liability policy

You won’t be responsible for promptly reported unauthorized transactions
You won’t be held responsible for any unauthorized purchases or ATM transactions, as long as they are reported promptly.

I don’t know. It seems pretty clear to me. I have no reason to be afraid of fraud when using my debit card (at least for CREDIT transactions). It is a little unclear what will happen to fraudulent PIN transactions, but that would of course require someone finding or stealing your card and knowing your PIN.

I had a fraudulent transaction once posted to my account via a stolen debit card number and I called the bank and had it removed (this was a smaller bank, not sure if it would have been better or worse with a big bank). It took about three days to clear up, so it is true that those funds were frozen during that time, but I was never actually at risk of losing the money. Sure, that was inconvenient, and I’ll give credit cards the advantage there, but are debit cards really that risky?

You may have other reasons for using a credit card over a debit card, rewards programs being the obvious number one choice, but I honestly don’t see the security risk. Am I missing something else?

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