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Debit cards are controversial. Numerous personal finance websites claim that they are not safe and should be avoided. Other sites maintain that debit cards are perfectly safe and that they offer the same zero liability protection as credit cards. The truth lies somewhere in the middle.
Zero liability?
It is true that both Visa and Mastercard have a zero-liability policy which applies to both credit and debit cards. Here’s Visa’s policy:
Visa’s Zero Liability* Policy is our guarantee that you won’t be held responsible for unauthorized charges made with your account or account information. You’re protected if your Visa credit or debit card is lost, stolen or fraudulently used, online or offline.
As for Mastercard, their website states the following:
Whether you use debit Mastercard to shop online, by phone or in a store, every purchase is backed by Zero Liability protection*. That means you won’t be held responsible in the event that someone makes unauthorized purchases with your card.
However, in order for this protection to apply, you must do the following:
- Always run your debit card as “credit”.
- Use reasonable care to prevent your card from being lost or stolen.
- Immediately report any loss or theft to your bank. Ideally, follow up your report with an email detailing information about your account, as well as the date and time when your card went missing.
Debit vs. credit card risks
According to the FTC, the most you can be held liable for with a credit card is $50. If you report your credit card loss before someone uses it, you will not be liable for any unauthorized charges. In addition, if your number is stolen but you haven’t lost your card, you will not be responsible for any unauthorized charges.
When it comes to debit cards, your liability will depend on how quickly you report a lost or stolen card:
| If you report your lost or stolen card: | Your maximum loss: |
| Before any unauthorized charges are made | $0 |
| Within 2 business days | $50 |
| Within more than 2 business days but less than 60 days after your statement is sent to you | $500 |
| More than 60 days after your statement is sent to you | Potentially all the money in your checking account, as well as all the money in any linked accounts |
Protecting your debit card
Even though debit cards come with a higher liability than credit cards, many people prefer to use them because it helps them avoid unnecessary debt. If you chose to use a debit card, here are some steps to reduce your risk:
- Always run your debit card as “credit”.
- Monitor your checking account daily. At a minimum, check your monthly statement.
- Some banks offer smartphone apps (or text messages) that notify you of any transactions made in real time. These notifications can offer you enhanced protection and it’s usually a free service so consider signing up for it.
- Guard your account information. Never disclose your account number over the phone unless you initiated the call.
- Never use unbranded ATM machines (often found in gas stations). Bank-affiliated ATMs are generally safer as they tend to be monitored more closely.
- Be on the lookout for “skimmers“. This is especially a risk in less-monitored areas.
The FTC has an additional list of recommendations to help keep your debit and credit cards safe.
Finally, if you choose to use a debit card, make sure to go with a good bank. Your debit card should have no:
- Minimum balances
- Maintenance fees
- Minimum number of transactions
- Overdraft fees
- Bank-to-bank transfer fees
And it goes without saying that the bank itself should be FDIC insured. As of this writing, the two banks that we like for debit cards are Ally Bank and Capital One 360, but we are constantly on the lookout for the best options for our readers.
We strive to provide accurate, unbiased information and we will never let advertisers influence our articles. To support our research, some of the links on this website may pay us a commission, at no extra cost to you.