A. From a security standpoint, signature debit payments are better than using your PIN. That's because when you authorize a transaction with your PIN, the money is immediately debited from your bank account. But a "signature" payment on a debit card with a Visa or MasterCard logo--usually required when you choose the credit option at checkout and use a debit card--is processed through a credit card network, so the actual withdrawal may take a few days. That extra time can be an advantage to you should fraud occur, "because once the money leaves your account, it's a bigger hassle trying to get it back," notes Avivah Litan, a security analyst with Gartner Inc.
Retailers prefer PIN transactions because they pay lower fees to the bank issuing the debit card--roughly 20 cents on a $100 purchase. A signature debit payment, meanwhile, costs them about seven times more in bank fees. That may help explain why more banks now offer rewards on debit cards when they are used like credit cards for everyday purchases.
Neither type of debit card transaction offers as much protection as credit cards. Under law, your total liability for fraudulent use of a credit card is only $50, no matter the amount of unauthorized charges. And credit card issuers often waive that amount. But unless you notify the bank within 48 hours after learning your debit card was lost or stolen, your liability for fraudulent use could be as much as $500. Fail to notify the bank within 60 days, and you may be liable for all depleted funds, as well as any resulting overdraft fees.
Leave a comment