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Stolen Debit Card Risk

How Stolen Debit Cards Affect You

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You are protected if your debit card is used by a thief. However, you have to act fast. Compared to credit cards, stolen debit cards carry a lot of risk. This page covers the basics of stolen debit cards and your liability.

Stolen debit cards are just one risk of using debit cards. For more information on how debit cards and credit cards work, see our page on Debit vs Credit card use.

With credit cards, you’re limited to $50 of liability for fraudulent use. What’s more, the thief spent the bank’s money – he didn’t empty your checking account and cause you to bounce important checks (or rack up fees for overdraft protection).

With a stolen debit card (or a stolen debit card number and PIN), you are protected as follows (source: Federal Reserve and Federal Trade Commission):

 

Your loss is limited to $50 if you notify the financial institution within two business days after learning of loss or theft of your card or code.

But you could lose as much as $500 if you do not tell the card issuer within two business days after learning of loss or theft.

If you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit, if any.

Given the added risk of loss, plus the headaches of risking direct access to your checking account, I don’t think it’s worth it to use a debit card on a day to day basis, much less online. Nevertheless, there may be times when it makes sense – if you can’t qualify for a credit card or if you want to help a youngster develop good habits. Just be sure to act fast if you lose your debit card.

Note that prepaid cards may have less protection than we've described above; those cards aren't required to follow the same rules. If you're using a prepaid card, check with your card issuer to find out if they voluntarily offer any benefits.

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