5 places to never use your debit card

In some situations, using a debit card can expose you to fraud or identity theft.

By MSN Money Partner Aug 25, 2011 10:23AM

This post comes from Brian O'Connell at partner site MainStreet.


No doubt about it, debit card usage is a big part of the new normal on Main Street these days as consumers try to manage credit card debt.


According to the TSYS & Mercator Advisory Group Debit Survey 2011, debit is now the preferred payment type in most point-of-sale locations, beating cash, credit cards and checks.


But that doesn't mean you should use debit cards all the time. In fact, there are some places and times that using a debit card is actually a lousy proposition.


For example, using a debit card online can work against you. If you have a problem with the purchase or your debit card number is stolen, it's a huge hassle to get the money restored to your account and make your card number safe and secure again. In the online world, credit cards are usually a better bet. Post continues after video.

Here are some other instances where debit card usage is a bad idea:

  • Rental or security deposits. If you have to put money down to rent a car or heavy-duty home improvement equipment, try not to use a debit card. Why? Because the business will actually take the money out of your account in the form of a security deposit. You'll get the cash back when you return the car or equipment. But with a credit card, the money is just "frozen" but not actually charged and you won't ever notice it's gone.
  • Restaurants and bars. There are way too many prying eyes around a dining establishment to trust using your debit card. Apart from the risk of having your card stolen, restaurants are one of those rare places where someone actually walks away with your card and you don't see them for a few minutes. Much better to use cash when dining out.
  • Regular payments. Businesses love to get their sticky little fingers on your debit card number so they can extract dues straight from your bank account on a regular basis. Whether it's a gym or your insurance company, you're better off using a credit card. That's because if there's a dispute, the business won't take the cash right out of your checking account if they don't have your debit card number.
  • Wi-Fi hot spots. Never use your debit card for an online purchase while at a coffee shop or other business that offers free Wi-Fi access. Many of those businesses have unsecured wireless connections, so it's much easier for hackers and scammers to log on and steal your data.
  • Any retail outlet where you choose the "credit" option. Debit cards allow you to choose between a debit (having cash taken straight out of your account) and a credit transaction (where the money will be taken out but it could be a few days later). For one, credit purchases cost the retailer more cash in swipe fees, so you could be hurting a small business owner. But the real problem is the delay when choosing credit -- you may forget the purchase and not account for the money. That can lead to an overdraft situation and the onerous fees that can go with them.

Debit cards are great financial tools, and it's easier carrying a card than a wad of cash. But debit cards shouldn't be used all the time -- and the situations listed above should be at the top of your list of "no debit" zones in the future.


More on MainStreet and MSN Money:


Aug 26, 2011 1:44PM

1. CROSSING THE STREET!  Don't do it! Statistics show that most people who were run over by cars, were crossing the street at the time. Use a bridge or a helicopter instead.

2. WALK FAST!  If you can't avoid crossing the street, or are just unwilling to use a bridge or a helicopter, usually moving faster can minimize the risk of being run over by most vehicles.

3. N0 SLEEPING ON STREET!  Sleeping on a street can greatly enhance the possibility of being run over by a vehicle.

4. SOCIAL NETWORKING!  A recent university study found that people who maintain a Facebook, Twitter, or even a LinkedIn profile that indicates you preference not to be run over by a vehicle - are more likely to be avoided by the driver of the vehicle (provided the driver is in your friend list)

5. STAY HOME MORE OFTEN!  Most car/pedestrian accidents occur outside the home (NTSB)


Aug 26, 2011 4:01PM
Never use your debit card to pay for prostitutes either.
Aug 25, 2011 7:30PM
When a thief hits your debit card they grab your money.  When a thief hits your credit card they grab the banks money.  Now guess which situation gathers more effort from the bank to remedy.
Aug 26, 2011 8:56AM
This is dumb advice. If I choose "Debit" as a payment option, they my Credit Union charges ME!  Credit transactions when using my debit card are free.  If the merchant has to pay a "Swipe Fee" and they are not building this cost of doing business in to their prices, then that's their problem.  Not mine.  So then, if the merchant has to pay for lighting their place of business, should we all shop in the dark???
Aug 26, 2011 9:37AM
I have read and been recommended to do the exact opposite of number 5. Always select the credit option becasue this means that you do not have to use your PIN number, where it is stored in the company DB. The less you use your pen number the less chance of ID theft.
Aug 26, 2011 9:16AM
This is the worst advice ever.  Every debit card with a visa or mastercard logo must afford you the same protection offered by credit card companies.  This is not a common courtesy of banks but the law. If using a debit card as credit makes you forget you spent the money, I am almost positive a credit card is not a good idea.
Aug 26, 2011 7:49AM
Sounds like a commercial for credit cards.  What a bunch of bull.  I don't have any credit cards anymore.  I use my debit card because I know I have the cash to back it up.  If I can't afford it, I don't buy it. 
Aug 25, 2011 2:15PM

The 5th location to NEVER use your debit card is written backward.  The way it reads, these places are somewhere you SHOULD use your debit card...for the reasons he listed.  Perhaps Brian O'Connell got a bit distracted while writing this and forgot the theme of his persuasive article!

Aug 25, 2011 10:12PM
Please don't believe this article.  There are so many mistatements and untruths, I don't even know where to begin.  It doesn't appear that Mr. McConnell did any amount of actual research on the subject.  I manage the card programs (and all other types of electronic banking) for a community bank.  All of your debit card transactions are covered by the same consumer protection laws as credit card transactions (Regulation E, the UCC, and Visa and MasterCard Rules).  His statement that "it's a huge hassle to get the money restored to your account and make your card number safe and secure again", is completely false.  Under the Visa rules (signature-based credit transactions), your bank must provisionally credit your account within 5 days, and under Reg E (PIN-based debit transactions) within 10 days.  Most banks will issue the credit faster, especially if the fraudulent charges have left you strapped for cash.  As soon as you report the unauthorized transactions -- do so immediately -- your card will be closed to prevent any further use, and a new card will be issued.  The new card has a brand new number and is therefore totally "safe and secure".  His statement that "Debit cards allow you to choose between a debit (having cash taken straight out of your account) and a credit transaction (where the money will be taken out but it could be a few days later)" is also false and appears to be an issue with his bank.  There is typically no difference in the timing of a transaction when you choose PIN-based (debit) vs. signature-based (credit) -- they should post to your account the same day.  And, disputing transactions with your bank is easy:  just call, email or walk into a branch.  They'll have you sign some paperwork, and voila, you're done. 
Aug 26, 2011 2:09PM
This is a ridiculous article.  Don't use it on line...Don't use it at a retail shop...Don't use it at a gas station...Don't use it at a restaurant...Can you think of any place TO use other than these?  I especially like the caution not to use it at the pump because you might forget to deduct it from your checkbook..really?   
Aug 26, 2011 8:43AM
So in other words we should all just cut up out debit cards right now?  Because I use my card for three out of the five situations listed in the article.
Aug 26, 2011 9:27AM
The #5 reason would basically mean that you would rarely use a debit card. If you refuse to keep your checkbook balanced you need to live a cash life anyway. Lord knows you don't want that mean old bank charging you the fees that they have already told you they would charge if you're stupid enough to overdraw. Someone that dumb needs to stay at home and let mommy handle all of their business.
Aug 26, 2011 11:47AM
In a website full of lame advice, this takes the cake. Don't use your debit card at restaurants ... uh, okay.
Aug 25, 2011 10:51PM
I know the opinion of those in my demographic don't matter, but I have no credit cards because I have a dark, sinful past & don't deserve them.  (Yes, that's sarcasm.)  Debit is my only non-cash option.  I use it in all the situations you mention & have never had a problem.
Aug 26, 2011 12:20PM
Another useless article. Who wrote this crap?
Aug 25, 2011 10:52PM
Lots of crap in that article.  Debit and credit cards are the same in terms of consumer protection.  I lost mine and someone used it to the tune of about $300.  Once I realized it, the bank returned the money to my account within about a day.  Also, while renting a car, you do have to pay an additional deposit (usually about $300), but you just have to know that going in...not a big deal.  Much better than paying the bank 20% interest and then having to deal with the games that they play to take your money.
Aug 26, 2011 12:06PM
It doesn't sound like I should use my debit card according to this article.
Aug 26, 2011 12:40AM

All I can say is there are a bunch of people bloggin' here tonigh that don't know crap about debit and or credit cards.  For cying out loud people grow up !!  People can just as easily steal your cash as your card info. nothing is safe, but I'll tell you this, if your card info is stolen and used, you will get your money back, and a new card with a different # and pin, if they steal your cash, the banks aren't going to go runnning after that big bad robber.

I'll take the plastic.

Aug 26, 2011 8:14AM

Don't listen to this article about online shopping. Online sites are safe as long as they have the verified https:// address and not just the http:// when paying through the checkout. You'll see that verified https:// address when you log on to your bank account too.


Basically you just have to use common sense when to use your credit card and when to use your debit card. High prices purchases are best paid with a credit card so you can dispute it if something is wrong.

Aug 26, 2011 7:18AM
So, like, what you're saying is never use your debit card?
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