In case of theft, credit cards are safer alternative

Hands holding fanned-out credit cards

Debit card fraud is back in the news with reports crooks tampered with PIN pads in dozens of Michaels craft stores across 20 states.

The scheme discovered earlier this month allowed thieves to use 100 customers' debit cards in fraudulent transactions.

This isn't the first breach, but it serves as a reminder that debit cards -- along with credit cards -- can leave us on the hook for a headache if either one is used fraudulently.

The size of that headache depends largely on which card is used fraudulently.

That’s because the protection offered consumers varies from credit cards to debit cards. And in general, those rules offer more protection for credit cards than for debit cards.

Under federal law, your liability is limited to $50 if your credit card is stolen or used fraudulently. And many card issuers offer consumers zero-liability fraud protection as a courtesy.

The rules pertaining to debit credit cards aren’t as generous. Or as clear cut.

In fact, what you’re liable for depends on whether your actual card was stolen, or if a thief just used the numbers to go on a shopping spree.

In either case, you must report the fraudulent purchases -- and theft of the card or numbers -- within two days after you notice the activity to be eligible for $50 liability.

Wait a week or two and you could be on the hook for as much as $500. And if you wait as long as 60 days to report the crime, your liability could be limitless.

Credit cards also offer you better protection during the investigation process.

In fact, you’re not responsible for those charges while the card issuer conducts the investigation to determine whether fraud was committed. Although, you still need to pay your bill on time if there are other charges that aren’t in dispute or you’ve got a balance.

If there are fraudulent charges made on your debit card, some banks will issue provisional credit pending the completion of their investigation; however, many will not issue full credit until they’ve pored over all the facts. And they can take up to 45 days to issue complete credit.

Bottom line: the next time you’re getting ready to retrieve a piece of plastic from your wallet, think twice about which one you pull out.

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