Tuesday, July 18, 2006

Limiting Debit Card Fraud Exposure

OK, this post is in response to some comments on ContentmentIsWealth.com. Lisa's blog post has to do with debit card fraud and asks for ideas on how to prevent it....

By doing what I lay out below you never have to worry about your entire bank balance being zapped. If your account is compromised you also save the hassle of having to notify ALL of your auto-pay's, ordering new checks, etc.

Here is how to have a "worry free phi-LOS-o-phy" about debit cards:
1. You open a second bank account.
2. You only put in what you would normally spend on debit card type .
3. You write checks and do all auto debits, etc out of your first account.
4. Cancel your debit card on your first account.

If your “debit card account” gets compromised you will have ZERO nsf fees because there are no checks out there- they are all on your other account. You would have almost zero headache other than closing and re-opening your “Debit card account” that holds your “Everyday Money”.

By putting in just part of your money every pay period you accomplish the goal of limiting your exposure when using your debit card. They only have access to the money that you put in each pay period. This amount even goes down in between pay periods limiting your risk even further.

A commenter named Matt says that they have their second checking account money auto deposited. This is even better if you have gotten past the fabled "personal cash flow" issues. In other words you don't want to use this system if you get alot of NSF fees! In that case instead of a second account use cash. Opening a second checking account will cause MORE problems for you! This reduces the number of transactions on your account and will result in fewer NSF fees.

At one point in that list of posts someone talked about using checks-- after thinking about that this was my response....Gee, a paper check is maybe more susceptible to fruad, anyone can take a cell phone pic of your check and have your account AND routing number AND phone number AND address AND your signature ... not good. If not that they can stick it on the office copier or hand write it and accomplish the same thing. I really should get rid of my check book! One lesson to be learned here... put as little info as possible on your checks. Most stores don't take checks any more anyway. f you have your social security number on your checks then throw those time bombs out and order new checks...

(somehow I feel like I am breaking some ethical blog rule.... is it ok to turn mine and other people's comments from one blog into a post on my own blog? Let me know!)


At 7/20/2006 3:38 PM, Anonymous Lisa said...

No, I don't think you are breaking a ethical blogging rule (and, heck, it's from my site!) I appreciate the link back and the extra discussion on the topic!

Now, I just need to decide if I want another checking account!

At 7/20/2006 5:08 PM, Blogger The Family CEO said...

Love your two checking account idea. And I agree with you on checks being a bigger liability.


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