Equal protection

Another feature of credit cards that has been added to debit cards is fraud and loss protection. Discover Card, Visa and MasterCard branded debit cards now have the same fraud and loss protections as credit cards. In Bankrate's survey, every bank that offers debit cards provides fraud and loss protection.
The Fair Credit Billing Act and the Electronic Funds Transfer Act provide procedures for consumers to follow if a credit or debit card is lost or stolen.
Under the Fair Credit act, your maximum liability for a stolen credit card is $50.

The Electronic Funds act, which covers debit cards, says liability is dependent on how quickly you report the loss or theft. If you report the theft within two business days, you are liable only for $50 in unauthorized use. If you don't report the loss in two business days, according to the Federal Trade Commission, "you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. That means you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts."
While the FTC's warnings about losing a check card are dire, the reality may be much less scary. Over the past few years, Discover Card, Visa and MasterCard have extended their zero-liability protection to debit cards. In effect, check cards now have the same protections as credit cards.
For Visa, offering zero liability "makes sense," Krattli says. "We make sure you have acceptance wherever you shop and make you feel as secure as you can be about your purchase. That's part of our brand promise: payment options, acceptance, comfort and security for purchases."
Despite the coverage, McBride has a caveat for consumers. "While many debit card issuers offer the same protection against fraud as that of credit cards, it still means closing the barn door after the horse is already out. It may take some time to restore the funds to the account, unlike a credit card where the cardholder can withhold payment on any fraudulent purchases."
Sloane also advises consumers to find out how their bank processes debit transactions.
"Visa has extended zero liability, but the banks have to agree. A transaction must go through the Visa or other network in order to be covered. You have to ask your bank whether zero liability applies to that debit card. Otherwise, they'll say you're exposed to the FTC rules. What is not discussed much is how long it takes to get the money back into the checking account rather than credit back."