The use of ATM debit cards has become increasingly popular for our everyday purchases. But what is the difference between your debit card and your credit card and what type of protection do you have as a consumer?
A debit card operates like cash or a check. When you make a purchase with a debit card, the money is immediately withdrawn from your bank account. With a debit card, you are only allowed to spend the money that is in your bank account. You do not incur interest, but you may have to pay your bank?s transaction fees or pay interest if you have to use the overdraft protection.
A credit card allows you to purchase now and pay later. You have a certain amount of time from when you make the purchase to when you receive the bill. With a credit card, you are allowed to spend up to the limit pre-determined by the bank. Interest rates and fees vary, but the majority of card issuers do not charge interest when you pay the full balance each month.
What type of protection do you have for lost or stolen cards?
Under the Electronic Fund Transfer Act, if you report your ATM debit card lost or stolen before it has been used, you are not liable for any unauthorized purchases or withdrawals. If you realize that your debit card is missing and report it to the bank within two business days, you will be held responsible for up to $50 of any unauthorized withdrawals. Your liability increases the longer you wait. If you report the card missing after the two business days, you are liable for up to $500. The liability you face is unlimited if you do not report unauthorized withdrawals within 60 days after your bank statement has been mailed to you.
Credit card loss is slightly different than an ATM card loss. Under the Fair Credit Billing Act, if you report that your credit card is missing before the card has been used, you are not responsible for any unauthorized withdrawals. If you report the card missing after an unauthorized charge has been made, you are only responsible for up to $50 of the unauthorized amount. After you have reported the credit card loss, be sure to review your billing statement. If you find more unauthorized charges, write a letter to the card issuer referencing each charge. Be sure to include the date the card was missing and the date you reported it to them. When you mail the letter, do not mail it with a payment or send it to the billing address.
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