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Cyber Shopping and Debit Cards Do Not Mix

Planning to shop online this holiday season? I have one very important piece of advice: Do not use a debit card. You’ll understand why when I tell you what happened to Carol D. several years ago.

Look, I know that when it comes to spending money, we all have our comfort zones. Me? I’m a cash person. I prefer anonymity to convenience. Others are all credit all the time, opting for convenience, and earning rewards to boot. You might be devoted to your debit card, knowing you are not at risk of spending more than you have. I get it. Your debit card is dear to you, and you are not alone. Debit cards generate trillions in purchases every year. OK, back to Carol.

Late on the Friday after Thanksgiving, a stranger went shopping online with Carol’s debit card. To this day, she does not know how he got the number, expiration date and CVV, but that’s all he needed. He didn’t need a PIN or any kind of identification to shop his brains out at Target’s online store. He spent thousands of dollars on Christmas gifts, all paid for with Carol’s debit card.

It was more than a week before Carol figured out what had happened. When the bank called to tell her she had overdrawn, she was horrified. She knew for certain that she had quite a bit of money in her account.

After many terrible hours, it was discovered that someone had cleaned out her checking account, and when it became overdrawn, the bank had tapped into her savings accounts automatically. Only when everything was gone did they contact her.

Had this thug stolen Carol’s credit card and gone on a shopping spree, she could have rested easy. Federal law provides that a credit card customer can be held for no more than $50 liability in the event someone steals it or uses it fraudulently. Visa and MasterCard both waive the $50, bringing a cardholder’s liability to zero.

Not so with a debit card. Debit cards are regulated by the Electronic Fund Transfer Act, and each bank can interpret how it complies with this much weaker law. Unless you report a problem within two days of the event, you could be held liable for at least $500.

Carol’s bank tried to be understanding, but they had no way of knowing whether she had authorized these charges or whether they were fraudulent. She was broke through the holidays while the bank moved at its own pace to investigate. After many months, the bank agreed to restore some of the money that was stolen but not nearly all of it. Carol came out a big loser.

My advice to you: Pay with a credit card and you will have the federal law to protect you against thieves. If you’re a die-hard debit card user, please understand the risks involved. And never use your debit card to buy something online. That’s a problem just waiting to happen.

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Mary Hunt

Mary invites you to visit her at, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at, "Ask Mary." Tips can be submitted at . This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a frugal living blog, and the author of the book "Debt-Proof Living."

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