Risks Associated with Debit Cards

Debit cards are becoming one of the most widely used methods of sending money worldwide.  Last year alone, Americans swiped their debit cards over 30 billion times, spending an average of $41 on each transaction.

Considering that about 80% of the rest of the world has used a credit or debit card at one point or another, the number of transactions happening each day with debit cards is astoundingly high, and only getting higher each year.  Debit cards are popular methods of sending money because it’s fast and easy on both ends of the transaction.  But there are some risks that debit card users need to be aware of.

One of the biggest complaints you’ll hear from debit card users regards security hold.  More of a nuisance than anything else, a security hold is essentially a merchant reaching into your checking account and freezing some available funds to make sure you can cover the cost of your transaction.

Hotels, car rental companies, and even gas stations are famous for using security holds.  Many businesses look at debit cards as being more risky than credit cards, so they see holds as a necessity, regardless of how annoying the holds can be to consumers.

With time, the holds are lifted, making available funds truly available again, but the timing for the customer is not always convenient.  One way around this is to use the card to access cash at ATM machines and pay cash instead of swiping your debit card.

Another complaint sometimes heard from debit card holders is that there is a lower level of fraud protection than with credit cards.  With a debit card, if a thief gains access to your checking account, that money is gone, sometimes without a trail.  This can be frustrating on many levels, as many consumers make regular payments out of their checking accounts for things like mortgages and auto payments.

If your account is accessed and emptied by a thief, you could rack up late charges and overdraft charges that banks will not always cover.  Building habits that protect your personal information from being accessed illegally is one way to avoid this potentially damaging problem.

In addition to these risks, some debit cardholders complain that there are some merchants that don’t accept debit cards at all.  Car rental agencies, for one, are notorious for only accepting credit cards.  There are a variety of reasons for this, but it’s always a good idea to carry a credit card while traveling and to have access to a line of credit in case of an emergency.  Debit cards are an outstanding tool for making financial transactions easy, but they shouldn’t be the only card in your wallet.

As long as debit cards are used appropriately, they will continue to be a convenient and easy way to send money worldwide.  Using debit cards to send money can save a great deal of time and money compared to other available methods and will make accessing funds simple for the person receiving your transfer.

Tips To Avoid Credit And Debit Card Fraud

There are many benefits to swiping a plastic card in order to complete financial transactions, including convenience, the reduced need to carry cash, worldwide acceptance, and direct access to money in bank accounts 24 hours a day. However, carrying a debit or credit card also comes with security risks that are a concern to both cardholders and issuers of bank cards.

Card issuers are taking steps to increase the security of funds that can be accessed by bank cards and major improvements have taken place to make using debit and credit cards a safer option than ever before.

The biggest risk with owning credit cards is the risk of fraud—someone acting as if they’re you in order to access your funds and purchase goods or services with them.  Most people who carry debit or credit cards can relate to the feeling of misplacing a wallet or a credit card and panicking at the thought of your card being used without your knowledge.

It is estimated that credit card fraud costs cardholders and issuers in excess of $500 million every year.  Credit card fraud is increasing as more transactions are carried out electronically over both telephone lines and the Internet.

Fraud can occur in a number of ways when it comes to bank cards.  The most obvious way is that if a card is lost or stolen and ends up in the hands of someone willing to commit fraud.  In addition, identity theft is one of the fastest growing crimes in the United States.

To steal an identity, thieves use various means to gain access to a consumer’s personal information, including full name, date of birth, and social security number.  With this information, they apply for credit cards and are often able to spend thousands of dollars before the fraud is ever detected.

There is also a type of fraud called “no card” fraud, in which transactions are carried out online or by telephone using a credit card number without ever having to show a merchant the actual credit or debit card.

There are several steps that consumers can take in order to prevent becoming a victim of credit fraud.  A few good ideas include:

1. Always sign the back of every bank card as soon as it is received.  Merchants are responsible for ensuring that the signature provided at the point of sale matches the cardholder signature on the back of the card.
2. Review card and banking statements regularly, watching closely for any transactions that are not familiar to you.
3. Choose a PIN number that is completely unpredictable, and never keep that number written in a place where your credit card is stored, such as a wallet or a purse.
4. Call your bank or credit card issuer immediately to report any suspicious activity.  Catching fraud early can be the difference in saving thousands of dollars.

These simple steps can save a great deal of time and money in protecting yourself from becoming a victim of fraud.