A Washington Post personal finance columnist got her identity stolen and someone tried to use it to buy $812.18 worth of running shoes. Somehow, the thief had gotten access to the Nancy Trejos personal information and stolen her Bank of America debit card number. The crook placed an order online with the store and arranged for an in-store pickup. The clerk grew suspicious when the woman couldn’t produce the card used to place the order.

Trejos thinks that it might be because she uses her debit card all the time as a way to reduce spending….

The idea is that the more immediate the financial impact, the more frugal you behave. Which is true, but in the event your debit card is stolen, you have fewer protections than with a credit card. Your liability is limited to $50 if you notify your bank within 2 days. After that, it’s $500. And if you wait longer then 60 days, you could lose it all. Furthermore, with a debit card, it’s your money that’s stolen, and you don’t get it back until the investigation is concluded in your favor. With a credit card, only the bank is out the money. And with a credit card, your maximum liability is $50.

So while debit cards might be good for people trying to reduce spending, they open one to more costly identity theft. Instead of using a debit card for these purposes, switch to a cash-based system and only use it take money out of the ATM.

FURTHER READING: Credit, ATM and Debit Cards: What to do if They’re Lost or Stolen [FTC]
Identity Theft Gets Personal [Washington Post]
(Photo: Ben Popken)

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