debit card
Image courtesy of en.wikipedia.org

Debit cards are a fast, convenient way to pay with just a swipe and still live within your means. You don’t have to carry wads of cash and you avoid piling up credit card debt. But there are some places you should never use a debit card. Why? It’s too dangerous.

Debit and credit card transactions make look the same at the checkout counter, but they are processed differently. Federal law stipulates that an individual’s liability for fraudulent use of his or her credit card is capped at $50. The law is more complicated for debit card transactions, depending on when you report a missing card and whether it has been used fraudulently. Your liability ranges from nothing to paying for all unauthorized transactions. To protect your checking account balance, beware using a debit card in these three places simply because the likelihood of having your card information stolen is far greater.

1. Online shopping sites
While most online shopping sites are secure, some of have been compromised — and you may not be able to tell the difference. Also, certain types of PC viruses can capture your credit card information as you type it even on secure shopping sites.

2. Restaurants
After you finish your meal, you tuck your debit card into the folder with the bill and hand it to the server. And then the server disappears to process the bill. Your debit card is now out of your sight, and you have to trust the honesty of that server, who could easily steal your information–and it could be a while before you figure it out.

3. Gas station pumps
You pull up to the pump, swipe your debit card and start filling the tank. When you’re done, you grab the receipt and go. Stop right there. When you swiped the debit card, the gas station computers contacted your bank’s computers for authorization. Because the gas station doesn’t know how much gas you will purchase — this happens before you even activate the pump — the gas station seeks authorization for a large amount, such as $75. Even if you only purchased $25 of gas, that extra $50 could be “on hold” for several days. That means you don’t have access to your own money. It could be worse. Gas stations are frequent targets of criminals who rig up devices to the pumps to capture credit card and debit card information as the cards are swiped. It’s called skimming, and it can cost you big bucks if you’re using a debit card.