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My bank is recommending that we get the Visa part activated on our ATM cards so that we can perform debit transactions. If not it will cost $1 per month to use the ATM card for debit transactions. We do not have a Visa activated ATM card as I remember something from NPR's Morning Edition about the Visa part as NOT having the same protection as a regular credit card.

Is this still correct?

All comments welcome

Thanks

Sean
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smb100,

You wrote, My bank is recommending that we get the Visa part activated on our ATM cards so that we can perform debit transactions. If not it will cost $1 per month to use the ATM card for debit transactions. We do not have a Visa activated ATM card as I remember something from NPR's Morning Edition about the Visa part as NOT having the same protection as a regular credit card.

Is this still correct?


It is still correct. The federal statutes for fraud protection on debit cards is much weaker than for credit cards. If Visa or your bank make any guarantees, get them in writing because it would probably be a matter for contract law and not federal statute.

Do you know what guarantees are provided by federal law for debt vs. credit cards...?

It sounds like when your bank chooses between the stick or the carrot, they prefer the stick. I prefer carrots myself.

- Joel
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I'm confused. I have an ATM card with a Visa logo. I've used this card at an ATM, as a debit card, and a credit card . And I was always charged $1/mo no matter what. What happens when you activate it?
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squirmyworm,

You wrote, I'm confused. I have an ATM card with a Visa logo. I've used this card at an ATM, as a debit card, and a credit card . And I was always charged $1/mo no matter what. What happens when you activate it?

30 seconds later it goes ka-boom! :-)

Seriously though, some banks can treat the ATM and Visa/MC checkcard components separately. Either way it's a debit card; but without the checkcard component activated, you have to know the PIN to take money out of your account.

My credit union charges for neither and they offer both checkcards and ATM-only cards. I only carry the latter.

- Joel
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Visa has a written policy that establishes zero liability for fraudulent charges conducted over Visa's network for either credit or debit charges. Charges conducted over ATM networks with your PIN are not covered.

http://usa.visa.com/personal/security/zero_liability.html

However, you have to report the fraudulent charge within a "reasonable time" after your statement is issued.

What NPR was referring to is that there's a legal restriction that credit card companies must credit back fraudulent charges if they're reported within 60 days of the statement being issued, while with debit cards the legal requirement is that they credit back fraudulent charges reported within 48 hours of your learning of them. However, Visa's policy seems to be more lenient than the law requires.

I would recommend reporting any fraudulent charges immediately, both by phone call and in writing, regardless of the card type. However, given Visa's current policy, it's unlikely that if you're on top of things you'll have a real problem with a Visa debit card.

-- Mark
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Azotic,

You wrote, What NPR was referring to is that there's a legal restriction that credit card companies must credit back fraudulent charges if they're reported within 60 days of the statement being issued, while with debit cards the legal requirement is that they credit back fraudulent charges reported within 48 hours of your learning of them. However, Visa's policy seems to be more lenient than the law requires.

Actually, I believe the 48-hour limit applies to ultimate liability. If you meet the 48-hour deadline, your liability exposure is $50 by law. If you report within 30 days, your potential liability is $500.

I also believe that a credit card company must give you a temporary credit for the amount in dispute while they take up to 30 days to investigate. Banks are under no obligation to issue a credit, even with Visa's no liability policy. Also, I believe a bank has 45 days under law to investigate reported fraud during which time you may have to do without the money that was stolen.

Also, I would recommend reporting any fraudulent charges immediately, both by phone call and in writing, regardless of the card type. However, given Visa's current policy, it's unlikely that if you're on top of things you'll have a real problem with a Visa debit card.

The very real problem this poses is that your funds may go missing for a month or more and you may need them to pay bills. Bounced checks, late payments and other nasty surprises may cascade as a direct result of this once incident and that's not the bank's problem. That's not generally the case with a credit card.

What's more Visa can withdraw their protection at some future date with little or no notice. If that were to ever happen, I wonder how many people would be caught by it unaware? Removing the protections offered by credit cards would literally require an Act of Congress, so I imagine you would get plenty of fair warning.

- Joel
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Banks are under no obligation to issue a credit, even with Visa's no liability policy. Also, I believe a bank has 45 days under law to investigate reported fraud during which time you may have to do without the money that was stolen.

From their policy (emphasis mine):

"Visa's cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within five business days of notification of the loss. However, many major financial institutions affiliated with Visa will issue provisional credit even earlier—within 24 to 48 hours after the loss is reported."

Bounced checks, late payments and other nasty surprises may cascade as a direct result of this once incident and that's not the bank's problem.

Again, from their statement of the policy:

Should someone steal your card number while you're shopping, online or off, you pay nothing for their fraudulent activity.

As an issuer of Visa products, banks are bound to Visa's rules in these matters and really don't have a choice about whether to refund bounced-check fees etc. This does not mean that someone may have to fight with them about it on occasion.

As you point out, they could change this policy in the future, of course, because these safeguards are not legally required of them. Still, this policy has been in place substantially unchanged for almost five years, so it's likely it'll be there for a while.

-- Mark
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One other thing: I agree that, as you also pointed out, being without fraudulently withdrawn funds for even a few days can be a severe problem, even if all bank charges are refunded. If you keep only the cash you'll need soon in your checking account and retain some savings, though, that should rarely be a big deal.

-- Mark
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To all of you who have replied to my original post and the discussion thereafter, Thank you. I will continue with the ATM card only, and will check with the bank to make usre that it is only $1 per month, not $1 per transaction. If not, my regular credit card will work just fine in future, and I will use the ATM card to obtain money from the ATM - its original purpose. Must admit that I do enjoy the direct debit from the account as it saves writing a cheque at the end of the month. However, peace of mind comes first.

Fools rule!

Again, thanks for all your comments and suggestions. Have a wonderful hoilday.

Sean
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