The Truth about Debit Cards

I recently got an email, from a somewhat misinformed reader, who writes as "Anonymous" rather then using a name. Apparently, he is afraid to let people know who he is. At anyrate, his email demanded that I post his letter.

Misinformation just drives me crazy, so just publish this: the Visa logo on a debit card does not provide additional liability protections. What you're saying is a myth. Please publish this, even if you disagree, so your readers have some doubt.

Can you believe that? Demanding that someone else publish his comments. He claims, he hates misinformation, yet a very causual search of the internet shows that it is him that is misinformed, at least in part.

Let me start with an artical from the USA Today, Still, debit cards don't carry the same legal protections as credit cards. The federal Truth in Lending Act limits your liability for fraudulent credit card charges to $50. Most credit card lenders won't even make you pay that.

Debit cards fall under a different law, the Electronic Fund Transfer Act. Your liability is limited to $50 if you notify your financial institution within two business days after discovering your debit card has been lost or stolen. If you wait more than two business days, but notify your bank within 60 days of the date your statement is mailed, you could lose up to $500. Wait longer than that, and you could lose all the money in your account.

Many debit card issuers provide protection beyond that required by federal law. Visa and MasterCard have zero-liability policies for debit cards processed through their networks.


Very interesting, according to this fear monger, debit cards are treated differently, and under the federal law, he is correct. However, what he refuses to accept is that Visa and Mastercard, has a zero-liability policy and all cards ran as a visa or mastercard are afforded the same protections. With a very few exceptions, most banks treat them as such. If your bank doesn't provide protection beyond federal law in accordance with Mastercard and Visa's zero-liability policy, then you need to change banks TODAY. Any financial institution, that does not accept this zero-liability policy, does not care about their customers.
Another look at the search engine brings up this artcle at interest.com, that has this to say on the subject,
Debit cards are also as safe as credit cards, as long as you don't give out your PIN. "You are only liable for $50 incharges if you lose your credit card and report the loss within two business days. It's the same with debit cards. Ofcourse it can take some time for things to get settled, and for money that was improperly taken out of your account be replaced."

The bank goes back to the merchant that accepted the forged signature and it becomes their problem for not checking the signature against the one on the back of the card and asking to see photo ID. Of course if someone has your card and your PIN they can keep taking money out of your account until you cancel your PIN.


It is clear that there are many misconceptions out there like the ones "Anonymous," is so eager to push with out checking out the facts for himself and the case of this guy totally ignore my own personal experience with the issue.
It is important though, to remember to chose credit rather then debit, when using your "debit card," "check card," or whatever you wish to call it.

Misinformaion is prevelant out there, but with a little research, the facts can be known. It is true federal law says one thing, but Visa and Mastercard issuers have a different policy, that in a majority of the cases is in the best interest of you, their customer.