While I was on vacation this week, some thief was busy emptying out my checking account.

I have always loved the convenience of debit cards, but this recent experience has me re-thinking the cost of that convenience.

First, your liability if you are a victim of debit card fraud is greater than if someone steals your credit card or uses your credit card to make unauthorized purchases.

With credit cards, your liability for unauthorized transactions is limited to $50. However, most major credit card issuers have a zero liability policy, so you typically aren’t liable for anything if you are a victim of credit card fraud.

With debit card fraud, your liability is limited to $50 only if you notify your financial institution within two business days after realizing their card has been lost or stolen. After that, your liability is limited to $500 if you report any suspicious activity within 60 days of receiving your account statement. After 60 days, your liability is unlimited, so it’s very important to check your statements on a regular basis.

Another big difference is that with debit card fraud the thief is stealing money directly from your checking account. Which can mean bounced checks, late fees, or even black marks on your credit report while you’re fighting to get your money back. With credit card fraud, you are fighting unauthorized charges, which can reduce the amount of credit you have available, but it doesn’t affect your cash flow like debit card fraud.

Even if you detect the fraud early and you are able to recover all of the money taken from your checking account, with debit card fraud you may be without your money for a period of time while your bank is investigating the fraud. I was very discouraged to find out that my bank can take up to 10 days to refund the money to my checking account (a previous bank refunded my money the same day when I was a victim years ago). And in some cases, your bank has up to 45 days to refund your money!

So what can you do to avoid debit card fraud (or credit card fraud)? While you may not be able to avoid it completely (if a thief really wants your money he’s probably going to get it no matter how cautious you are), here are some steps you can take to minimize your risk for fraud:

  • Check your account balance and activity frequently – I check mine at least once a week, and usually more, but since I was on vacation this past week it took a little over a week to discover the unauthorized transaction in my checking account.
  • Call your bank immediately if your debit card is lost or stolen.
  • Check your bank statements immediately (no throwing them in a pile or drawer to review a month later).
  • Notify your bank by phone (or in person) and in writing as soon as you discover the fraud.
  • If it’s an unauthorized transaction, contact the company the thief purchased goods through immediately upon discovering the fraud – in writing.
  • Be cautious about where you use your debit card. I’m not sure how the thief got my debit card information since I use my debit card frequently, but I’m pretty careful about not using my card on websites that don’t look secure, or stores where I don’t shop regularly.
  • Keep receipts or other records to back up all of your purchases. If you use your debit card frequently but don’t keep good records, it’s possible that an unauthorized transaction could slip by you unnoticed.
  • Use a credit card instead of a debit card if you are shopping online or with someone you don’t know.