News & Views

It's no longer safe to use a Debit Card

Security update for Financial Advisers and Paraplanners

13 Sep 2019

It's no longer safe to use a Debit Card

Every year, increasing millions of consumers are victims of scams and identity fraud. The worst-case scenario is when an identity thief drains your bank account, takes your property and sells or trades your sensitive information.

At a Google Conference, a young man posed a question that's often asked: “Given all the advancements in computing and technology, isn’t it harder for today’s criminals to steal your identity than it was back in the 1960s?” The answer: It’s not harder. In fact, it’s thousands of times easier today than it was then.

Identify thieves love technology because it gives them a convenient pathway to all the details of your life. Just think about all that’s available to you with just a few taps on your keyboard: Credit card reports, bank account numbers and personal and family details. It’s all there online.

So how do we significantly reduce our chances of being scammed? 

Never, ever use a debit card.  It turns out that a debit card has become the worst financial tool ever given to the consumer. Every time you use one, you put your money, your property and your bank accounts at risk.

Instead, we must all now use credit cards. With credit cards, the law limits our liability if there’s an unauthorised use of our card.

When we use a credit card, we're spending the Credit Card Company’s money, every day until we pay the bill at the end of the month. Meanwhile, our money is safely held in our bank account.

When there's the next large data breach and a criminal steals your credit card details and charges £100,000 to it, you're protected and your credit card company will cancel the card and send a new one within the next couple of days. You won't be responsible for any fraudulent purchases made. 

If the same thing happens and the criminals get your debit card information, however, you could lose all the money in your bank account and have a difficult and lengthy time trying to recover it.  

Switch to using a Credit Card as soon as possible, but you must pay it off, in full, every month. The best way do this is to set up a Direct Debit with the Credit Card Company, so the full amount owed is automatically deducted from your Bank Account each month.

Phil Goodenough

Covingtons

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