NEW YORK (CNNMoney) — While the tens of millions of Target shoppers who had their credit and debit card information stolen likely won’t be on the hook for any fraudulent transactions that may occur, debit card users could face much bigger headaches than credit card users.
That’s because debit and credit cards are treated differently by consumer protection laws. Under federal law, your personal liability for fraudulent charges on a credit card can’t exceed $50. But if a fraudster uses your debit card, you could be liable for $500 or more, depending on how quickly you report it.
“I know people love their debit cards. But man oh man, they are loaded with holes when it comes to fraud,” said John Ulzheimer, credit expert at CreditSesame.com, a credit management website.
Plus, if someone uses your credit card, the charge is often credited back to your account immediately after it’s reported, Ulzheimer said.
Yet, if a crook uses your debit card, not only can they drain your bank account, but it can take up to two weeks for the bank to investigate the fraud and reimburse your account.
“In the meantime, you might have to pay your rent, your utilities and other bills,” said Beth Givens, director of the Privacy Rights Clearinghouse. The organization recommends that consumers stick to credit cards as much as possible.