Advertisement
credit & debt

What's Your Liability With Debit, Credit and Prepaid Cards?

Find out what protection you get with each type of card.

Credit cards have the most-robust fraud protections. Legally, a credit card holder is responsible for no more than $50 in unauthorized purchases, and you’ll have no liability if you report a lost or stolen card before a thief can use it. That said, American Express, Discover, MasterCard and Visa take full responsibility for unauthorized purchases. Plus, under the Fair Credit Billing Act, if you have a billing problem with a merchant, a credit card issuer must investigate and resolve your complaint, and you can withhold payment until then.

Debit cards tied to checking accounts are subject to a different set of rules. Report a missing debit card before unauthorized charges take place and you won’t lose any money. If you report loss or theft within two business days, you’re liable for up to $50. You could lose up to $500 if you report the problem after two days but before 60 days have passed, and you may have unlimited liability thereafter. Even so, many banks will refund any fraudulent charges if you report the problem promptly and the bank has no reason to think you’re falsely reporting fraud. Plus, Visa and MasterCard generally extend their zero-liability protections to signature transactions (as opposed to punching in your PIN) on debit cards with their logos.

Advertisement - Article continues below

Prepaid cards, in general, do not have federal consumer protection against unauthorized transactions, although payroll cards that employers use to disburse wages are subject to the debit card rules. Still, many prepaid card issuers will reimburse you for fraudulent activity as long as you report it quickly. Register your prepaid card to make sure you’re eligible for fraud protection, and look for a card that lists at least a couple months’ worth of your past transactions when you log into your account online. Regularly check your account for suspicious activity.

Advertisement
Advertisement

Most Popular

What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much will it save you?
August 10, 2020
7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
How a Second Stimulus Check Could Differ from Your First One
Tax Breaks

How a Second Stimulus Check Could Differ from Your First One

The HEROES Act, which the House passed in May, would authorize another round of stimulus checks. While the new payments would be similar to the first …
August 11, 2020

Recommended

6 Money-Smart Ways to Spend Your Stimulus Check
Tax Breaks

6 Money-Smart Ways to Spend Your Stimulus Check

If you don't have to use your stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
July 30, 2020
Emergency Funds: How to Get Started
Making Your Money Last

Emergency Funds: How to Get Started

There’s no one-size-fits-all formula for how much you’ll need.
July 30, 2020
The Finances of Homeschooling Your Kids: What It Costs, Tax Breaks, More
spending

The Finances of Homeschooling Your Kids: What It Costs, Tax Breaks, More

If you're contemplating homeschooling for the 2020-2021 school year and beyond, consider these 10 things -- from surprising homeschooling costs to pot…
July 30, 2020
10 Ways to Save On Your Cell Phone Plan
family savings

10 Ways to Save On Your Cell Phone Plan

We’ve rounded up 10 techniques to cut expenses on both your cell phone plan and your device.
July 20, 2020