Debit Cards Favored by Identity Thieves

Bad news for debit cardholders: identity thieves and fraud artists prefer their cards over conventional credit cards. Security experts and credit specialists are renewing warnings against being too lax and laidback when it comes to securing cards. According to many analysts, more Americans are expected to lose their hard earned money especially since recent studies have shown that debit cardholders outnumber their credit card-wielding counterparts.

At present, there are more than 176 million debit cards in the U.S. That’s 3 million cards more than conventional credit cards. The impressive figure is also raising many experts’ concern over the ever-increasing threat of identity theft. With 9.9 million cardholders claiming they were victims of card fraud, analysts say that the 22 percent jump may only get higher as more and more consumers opt for less secured debit cards.

Federal government agencies and credit agencies have also reported that identity theft and card fraud have cost the industry some $48 billion this year alone. The alarming figure is causing some card companies to review their security policies. However, several banks and card issuers are also calling on the government to enact provisions to better protect cardholders against fraud artists.

According to industry experts, debit cards are notoriously harder to secure than ordinary credit cards because of their very nature. Unlike conventional cards, debit cards need a deposit for cardholders to be able to use them. While they may help consumers control their spending urges by having very low credit limits, any security breach can mean loss of real money. Ordinary credit cards, on the other hand, lose no real money if they are compromised. Federal laws also limit the cardholders’ liability to a maximum of $50 when their cards are stolen or compromised.

Many experts also point out that card companies don’t monitor debit cards as often as they do with credit cards because these particular cards do not offer that much in terms of profits. Credit cards have higher credit limits so erring consumers can be charged more for going over their limits. Debit cardholders, on the other hand, spend only their own money, and not the bank’s or creditor’s.

Some analysts are also advising consumers to forgo debit cards and opt for credit cards because of the added security. In the event of card fraud or identity theft, cardholders need not report the situation immediately to card companies because of the $50 liability cap mandated by law. However, failure to report and demand action on card fraud can mean lower credit ratings.