The case against using debit cards

Having your debit card information stolen can be far more damaging than having your credit card information stolen. The convenience of a debit card just isn't worth the risk. 

LM Otero/AP/FIle
This 2011 file photo shows a Visa card in a wallet in Richardson, Texas. Hamm argues against using debit cards for everyday transactions, because the consequences of debit card fraud can be huge.

A few days ago, one of my close friends shared a harrowing story with me regarding identity theft. The person had their checking account compromised and found themselves spending a great deal of time working closely with their bank to resolve all of the issues.

That person was not entirely sure whether everything was cleaned up, but they had fixed many of the worst transaction errors and changed their debit cards and PINs.

My response? “If I were you, I would never, ever use my debit card outside of an ATM, ever again.”

Here’s the reason: if an identity thief gets ahold of your credit card number, they just have access to your credit card account. While that can cause some minor inconveniences, it doesn’t cause any disastrous life problems.

In this situation, the worst thing that happens is that someone charges your credit card up to the limit, in which case you simply use cash from your checking account to pay for things until you resolve the situation.

On the other hand, if an identity thief gets ahold of your debit card number, they have access to your checking account. This can cause some major problems if you don’t resolve it immediately.

Here, checks can bounce, overdraft costs can occur, bills don’t get paid, and you can be completely without money at moments when you really need it.

For me, the convenience of the debit card just isn’t worth the risk. I want to minimize (or preferably eliminate) the chance that an identity thief can directly access my checking account.

So, how do I pay for things?

I try to use cash wherever possible. I vastly prefer to use cash for face-to-face transactions, for a few reasons. One, there’s no way any identity theft can occur. Two, when I support a local business with cash, they don’t have to pay the usage fees for credit card use. Whenever you use a credit card at a business, that business has to pay a fee because you used the card. Three, it provides a very visual way for my children to understand financial transactions.

I use a single credit card for other situations. I have one credit card that I use for online purchases and for situations where cash is unavailable for purchases. That credit card is tied to the retailer I use most often so I maximize the “rewards” I get for using that card.

I pay off that credit card in full each month. Whenever that credit card bill comes in, I pay the entire balance on that card. I don’t even allow a dime to sit there from month to month. Any money left on that credit card balance just costs you more money.

I want to avoid identity theft at all costs. The most effective way to do that is to minimize the places where I share sensitive identity information and, if I do share such information, it is information that can be tightly contained and separated from direct access to my money.

Be sensible with your cards and you can go a long way toward minimizing the impact identity theft can have on you.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.