As cases of identity theft grow, particularly through credit cards, it's essential for college students to learn how to spot the signs of fraud.
A Credit Card Is Safer Than a Debit Card
You might think that an easy way to avoid credit card fraud is to avoid credit cards altogether. But fraudsters also target debit cards, and having money stolen from your checking account through your debit card could cause a ripple effect.
"With a credit card, you're using the credit card company's money," says paige Hanson, chief of identity education at Symantec. "But with a debit card, you're spending your own money."
Even if you report a fraudulent transaction on your debit card immediately, the bank may not reimburse you until its investigation is completed. "So you still have your rent, your car payment and your phone bill, and you're not able to pay that," says Hanson.
And if it happens shortly before tuition is due, you may be forced to take out student loans to cover the cost.
If you report fraud on a credit card as soon as it occurs, you likely won't be responsible for any of the unauthorized charges.
Federal law limits your liability with unauthorized credit card charges to $50. Even so, many credit card companies offer zero-liability fraud protection, which means if you report a fraudulent purchase promptly, you won't be on the hook for any of it.
In contrast, you could be responsible for up to $500 of fraudulent purchases made with your debit card if you don't report the fraud within two business days after you learn about it. If you don't notice the fraud until more than 60 days after you received your bank statement, you could lose all that money.