Are debit cards secure? Yes. And here's why.

Sep 16, 2020 6:00:00 AM/ by Rebecca Prescott

Are debit cards safe? What about when compared to using cash or a credit card?

The recent rise of "skimmers" have made many consumers think twice about using their debit cards when making purchases. Especially at places like the gas pump. The answer is quite simple. Yes, debits cards are secure and have many safety benefits over both cash and credit. Let's dive in, shall we?

Debit cards are safer to carry than cash

This one might seem obvious at first, but debit cards are safer to carry than cash for many reasons. If you lose your cash, or your wallet gets stolen, you're out of luck. Payment cards, and debit cards, in particular, can be canceled and replaced swiftly and remotely. 

Debit cards have multi-layers of security

Ever wonder what that fancy little chip does in your debit card? It's called an EMV chip, and paired with a debit card, the two make an EMV card, and the chip provides consumers with additional security when making transactions at stores, points-of-purchase, or ATMs because they're hard to skim. Just like the magnetic stripe you see on the back of your card, the chip contains information about the account associated with the card.

Of course, this added security is in addition to the fraud prevention monitoring already offered by many card providers. The chip makes transactions more secure by encrypting information when used at a chip-enabled terminal. (Debit card chips just became our second favorite chip after tortilla, of course)

A debit card requires a pin

Unlike cash or a credit card, the use of a debit card requires a PIN or Personal Identification Number.

When you make a purchase with a chip card (for say, a bag of tortilla chips) or you withdraw cash with an ATM card, the card reader must first gather information about the account from the card. Traditionally that's when that magic magnetic strip featuring millions of tiny particles would normally come into play. But now, most cards have EMV chips (as mentioned above), which contain pretty much the same info, except the magnetic strip holds static information, while the EMV chip creates a one-time code with the information needed to access the consumer’s account. But, back to your purchase....

After the information is pulled from the chip by the ATM or point-of-sale (POS) you're using, it sends it to the card issuer's bank, and along with the amount of the transaction. Your PIN, at this point, is considered an additional verification step.

Compared to a credit card, this additional measure of security automatically makes it more difficult for someone else to make a purchase with your card. Credit cards on the other hand? It's just swipe and go. Remember though, whenever you enter your PIN always attempt to conceal the pad as best you can.

A debit card has limit liability if stolen

Many believe that only a credit card can limit your liability if stolen, but federal law covers debit cards as well. The key is timing. The faster you act the better.

If you report an ATM or debit card missing before someone uses it, the EFTA (Electronic Fund Transfer Act) says you are not responsible for any unauthorized transactions. If someone uses your ATM or debit card before you report it lost or stolen, your liability depends on how quickly you report it. According to the FTC, those time constraints are as follows:

Debit card fraud reporting timeline

Photo courtesy of the FTC

But what if someone makes an unauthorized transaction with your debit card, but your debit card isn't lost? In that case, you are not liable for those transactions if you report them within 60 days of your statement being sent to you.

Now, we're going to get a little lawyer-y here for a second so excuse us but, if you can convince the card issuing bank or credit union that your notification failure was due to extenuating circumstances, it must extend the notification timeline for a "reasonable period."

A debit card limits your ability to overspend

The biggest reason many choose a debit card over a credit card is that it helps you avoid overspending. You may have the money in your checking account, but that doesn't mean you can access it. Many debit cards come with a daily spending limit, which is set by the individual bank or credit union that issues your card. Plus, you're more likely to spend within your means when using debit versus racking up debt and paying interest on a credit card.

Additional debit card safety tips

Just because debit cards come with additional safety precautions, doesn't mean you're out of harm's way. Make sure you:

  • Don't carry your PIN in your wallet, purse, or pocket — or write it on your ATM or debit card. Commit it to memory.

  • Never write your PIN or debit card number on the outside of a deposit slip, an envelope, or other papers that could be lost or looked at.

  • Periodically check your account activity, especially if you're a fan of online banking. Review your balance and transaction history. If you notice anything is off, report those discrepancies to your card issuer immediately.

  • Only use ATMs at a bank or credit union, because those located at convenience stores, subway stations, and other public places have a greater risk of having a 'skimming' device.

Topics: Educational

Written by Rebecca Prescott

Rebecca Prescott is the marketing manager for Peoples Bank, based in Indianola.