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Apache is functioning normally

July 15, 2024 by Brett Tams

Credit card scams have been well publicized in recent years, but you may not be aware of the uptick in debit card scams. According to FICO®, the total number of compromised debit cards in 2023 was up 96% over the last year surveyed, and more than 315,000 cards were impacted.

Whether swiping your debit card in person or while shopping online, you’ll want to be vigilant. Here, learn the ins and outs of debit card fraud, plus how to protect yourself.

What Is Debit Card Fraud?

Debit card fraud occurs when an unauthorized third-party or individual uses your debit card to take out cash or make purchases without your permission. Scammers can use sensitive financial details — your card number, PIN, CVV code, and expiration date — to make purchases that drain your bank account.

If left undetected, debit card fraud could potentially wipe out your bank balance. You’ll need to go through a process to dispute the charges and/or withdrawals to try to get your money back.

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Common Debit Card Fraud Tactics

Debit card scams can take many forms. Here are some of the most common types of debit card fraud.

Skimming Devices

Fraudsters install skimming devices on ATMs and payment terminals. These devices can look as if they are simply part of the machine; they fit over the slot where your card usually goes. If you unwittingly insert your debit card, the skimmer can scan the microchip on your card. Your card’s details can then be downloaded, stored, and used without authorization. Skimming can happen at any payment terminal, but it tends to be most common at gas station pumps and ATMs.

Phishing Scams

A phishing scam occurs when scammers create fake sites, and/or send bogus emails or text messages in hopes of luring you to reveal your debit card details. Then, your financial credentials can be used by criminals.

These fraudsters often pretend to be an individual or company with a too-good-to-be-true offer or an urgent situation that spurs you to take action. For instance, they might offer a new laptop at a remarkably low price, or they could tell you your bank account has been compromised and you need to update your credentials immediately.

The goal is to get you to click on a fake site and input your debit card information. While less common, you might get a phone call with an offer that requires your card info on the spot.

Card Theft

Another common way fraudsters can use your debit card to make purchases or take out cash is to steal your physical card. Once they have their hands on your card, they might try to guess your PIN by taking a stab at what your PIN might be — for instance, your birth year. (This information may also be gleaned from social media accounts or the dark web once they have your name.)

Scammers might also figure out your PIN by “shoulder surfing” or subtly peering over your shoulder as you punch in your PIN at an ATM. Once they have that information, they could steal your card and use it to empty your checking account.

Recommended: When Were Debit Cards Invented?

Preventing Debit Card Fraud

Here are steps you can take to safeguard your personal and financial card data from would-be thieves:

Secure Your Card

You can secure your card by signing the back of your debit card, keeping your PIN private, and changing your PIN regularly.

You might also want to consider using a credit card for online purchases and when paying for gas at the pump. Credit cards typically have greater fraud protection than debit cards.

Monitor Accounts Regularly

By monitoring your accounts, you can spot any suspicious debit card activity more quickly. For instance, set text or email alerts for debit card transactions and aim to check recent activity through your bank’s mobile app.

Many people find checking their bank accounts once or even a few times a week is a wise move. It’s also a good idea to comb through your recent banking statements for anything that seems out-of-the-ordinary, such as:

• Purchases you didn’t make, including micro payments of a dollar or so

• Unauthorized big-ticket transactions

• Multiple purchases from the same store you didn’t authorize

Use Chip Cards and Digital Wallets

Chip cards use EMV technology, which involves a tiny embedded computer chip that makes it harder for fraudsters to skim and access your debit card’s details. They can be less susceptible to fraudulent activity than those with the standard magnetic strip.

Digital wallets have greater protections, too. They employ security features such as encryption and tokenization, which add a wall of protection against fraudsters trying to access your card data. Additionally, because digital wallets are stored on your phone, they’re usually safeguarded by biometric screening, multi-factor authentication, and passwords.

What To Do if Fraud Occurs

Should you fall victim to hackers, know that it can (and does) happen to anyone. With more sophisticated tactics and greater technology, fraudsters are getting better at finding ways to snag your debit card data. Here’s what to do should you find yourself a victim of debit card fraud.

Report It Immediately

If your debit card has been lost or stolen or you suspect fraud, the first step is to report it to your bank immediately. Reporting the fraud as soon as possible limits your financial responsibility and can halt the damage the scammer can do. Contact your bank ASAP if you notice unusual activity and request guidance. Depending on your particular situation, you may also have to take steps to report identity theft.

Dispute Fraudulent Charges

If the issue is a fraudulent charge on your debit card, try contacting the merchant to see if you can resolve the issue on their end.

At the same time, you’ll also want to dispute fraudulent charges by contacting the bank or credit union, as mentioned above. It’s important to do this ASAP (and no more than 60 days after the problem occurs). Once you dispute a charge, the financial institution can take up to 90 days to investigate and resolve your dispute.

You can also request a “chargeback” on debit card transactions. Essentially, a chargeback occurs when you dispute a transaction and reverse it. The money that got charged goes back into your account as the financial institution investigates the issue. When it’s resolved, you either keep the credit or, if the bank decides there wasn’t fraud, the funds are taken out of your account.

Get a New Debit Card

When you report fraudulent charges, the bank or credit union can freeze your account, which blocks anyone — including yourself — from using it. If they aren’t already sending you a new debit card, ask for one. Your old card is compromised, so you’ll want a new one.

Also, if you lose your debit card, that’s another reason to call your bank about freezing your account and getting a new one sent to you. Your missing card could be in the hands of a criminal.

Recommended: What Is An ATM Card?

Debit Card Fraud Protections

Under the Electronic Fund Transfer Act (EFTA), if you let your financial institution know within two business days after you notice suspicious activity, you are typically only liable for up to $50. If you inform them after that 48-hour period but within 60 days, you could be liable for up to $500. If you don’t notify them until more than 60 days has passed since the incident, you could face unlimited losses.

Tips for Safer Debit Card Use

Next, delve into best practices to keep your debit card and its details secure.

Avoid Unsecured Wifi

Hackers will go to great lengths to try to tap unsecured networks and steal private information, including personal details, passwords, and data about your checking and savings accounts, plus other financial intel.

To avoid making your banking data vulnerable to thieves, don’t use public or unsecured wifi. Instead, make sure you’re on a secure network. Secure networks have protective measures in place to ward off unauthorized access and theft.

Update PINs and Passwords

Make it a habit to update your debit card and app PIN and banking passwords regularly. Make sure you use unique, strong passwords. In other words, alphanumeric passwords that also contain special symbols. You’ll also want to steer clear of using weak passwords that can be easily guessed, like your date of birth.

Use Credit Cards for More Protection

Credit cards can offer greater protection than debit cards. When a hacker uses your credit card for fraudulent purchases, they’re not using your money but your credit. So you won’t risk having your bank account wiped out.

Plus, most credit cards provide zero liability protection for unauthorized charges. And, if you notice any suspicious activity, you can likely freeze your card to prevent any additional credit card scams from occurring.

The Takeaway

While debit card fraud is on the rise and scammers are more sophisticated in their tactics, you can take steps to prevent debit card fraud from happening. Monitoring your accounts regularly, keeping your credentials private, and being wary of skimmers are among those moves that can help you keep your bank account secure.

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FAQ

What are common debit card fraud red flags?

Red flags for credit card debt include multiple transactions from the same retailer, unusually large purchases, or purchases made in a place you haven’t visited. It’s always a good idea to check your transactions and monitor your banking activity regularly, at least once a week.

Are debit or credit cards safer?

Credit cards offer greater fraud protection and are generally safer to use than debit cards. Many major card issuers offer zero liability fraud protection. However, you can accrue interest on your purchases, while debit cards simply tap funds you have on deposit.

Can a bank reverse fraudulent debit charges?

Yes, a bank may be able to reverse fraudulent debit card charges. You can request a chargeback, for example, when a transaction goes awry. If your card was lost or stolen and there has been suspicious activity, let your financial institution know ASAP. If you alert them within two business days after discovering the fraudulent charges, you generally won’t be held accountable for more than $50. If it’s been more than two days but less than 60 days, you can be liable for $500. If you wait more than 60 days, you could endure unlimited losses.

Photo credit: iStock/Bussarin Rinchumrus

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

Apache is functioning normally

July 13, 2024 by Brett Tams

Money market and checking accounts can both offer a safe place to store your cash, easy access to your funds, and the ability to earn a bit of interest. However, they are not identical. Money market accounts generally offer higher interest rates, but may require higher minimum deposits and balances, and they may also restrict how many transactions you can make per month.

Understanding the differences between these two accounts, and the pros and cons of each, can help you determine which is the best choice for your needs.

What Is a Checking Account?

A checking account is a deposit account where you can keep your money, safely storing your earnings and managing your everyday spending. A deposit account, for those who aren’t used to the term, is a type of bank account that lets you deposit and withdraw funds.

Unlike a savings account (which is often designated for an emergency fund and future goals, like a new car), a checking account is designed for frequent use, such as paying for your living expenses and basic purchases.

Checking accounts typically feature unlimited transfers, deposits, and withdrawals. If the checking account is with a bank, the funds are likely protected by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per account ownership category, per insured institution. If the account is with a credit union, the money is likely insured up to the same limits by the National Credit Union Administration (NCUA).

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💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

What Is a Money Market Account?

A money market account (MMA) is also a deposit account. If you’re putting different deposit accounts on a spectrum, a money market account leans more toward the savings account end of the range. They tend to have higher interest rates than a checking account and are typically better suited to storing your funds for future goals.

Money market accounts are protected by the FDIC and NCUA in the same way as checking accounts. However, these accounts often have limits on withdrawals and transfers. Another feature to note: They frequently have higher minimum deposit and balance requirements than checking accounts.

Recommended: Money Market Account vs Certificate of Deposit (CD)

Key Differences

Here are some key differences when comparing money market vs. checking accounts.

Interest Rates

You have a better chance of scooping up a higher interest rate on a money market account vs. a checking account. (Some checking accounts offer no interest at all.)

The national average interest rate for money market accounts is 0.67%, but you’ll likely find higher rates than that. Some financial institutions offer money market accounts with annual percentage yields (APYs) of 5.00% and higher. On the other hand, the national average rate for checking accounts is 0.08%.

Accessibility of Funds

As checking accounts are made for everyday purchases, they feature unlimited transactions — transfers, deposits, and withdrawals. A money market account will likely provide similar forms of access to your money, such as check writing privileges, debit card transactions, and ATM withdrawals. However, how often you can conduct these transactions with a money market account may be limited, as you’ll learn in the next point.

Transaction Limits

With a checking account, you typically can access your funds as often as you like. With money market accounts, this may not be the case. While the Federal Reserve lifted previous caps on monthly limits for withdrawals, deposits, and transfers set by Regulation D, a bank or credit union might still set limits. You could find yourself restricted to, say, six transactions of a certain kind per statement period. It’s therefore important to read the find print on your account agreement or to ask a customer service rep for details.

Opening Deposit Requirements

Another key difference between a money market account and a checking account is the opening deposit requirements. Money market accounts typically have higher minimum opening deposits than their checking counterparts.

Plus, you might need to maintain a higher monthly balance. Stashing a larger sum of cash (say, $2,500) in your money market account may be necessary to snag a higher interest rate and lower account fees. Standard checking accounts typically don’t have these conditions, although some premium accounts do require higher balances.

Pros of Checking Accounts

When comparing these two financial products, ponder the pros and cons of checking accounts. First, consider their advantages:

Low opening deposit. You can open a checking account with no initial deposit at some financial institutions. Others may require $25 to $100.

Convenient access. As previously noted, you can typically access the funds in a checking account as often as you like via a debit card, an ATM, electronic transfers, or checks. There may be an unlimited number of transactions you can make in a given month.

Pay bills. You can usually set up automatic bill pay so your financial institution sends funds to payees on your behalf. Plus you can set up autopay with different companies so that they can deduct funds from your checking account to pay for bills each month, such as utility bills, insurance premiums, and credit card payments.

Debit card. When you open a checking account, you typically receive a debit card for everyday purchases, whether in-person and online, and for withdrawing cash at an ATM.

Cons of Checking Accounts

Now, consider some of the downsides of a checking account:

Low interest. Checking accounts aren’t designed to grow your savings; they’re designed to pay bills, make everyday purchases, and constantly move money in and out. As such, they don’t feature high interest rates. Some may not earn any interest. It’s likely that any interest earnings on a checking account will be outpaced by inflation.

Monthly service fees. A checking account might come with a monthly service fee. However, you might be able to opt out of these fees by maintaining a minimum balance or receiving a certain amount in direct deposits in a statement cycle.

Other fees. You might also find yourself paying out-of-network ATM fees, overdraft fees, bounced check or returned payment fees, and paper statement fees with a checking account.

Pros of Money Market Accounts

Here are some advantages to opening a money market account:

Higher interest rates. You will typically enjoy a higher rate with a money market than a standard checking account, though perhaps not as much as a savings account. The rates vary depending on where you do your banking.

Access to cash. Unlike certificates of deposit (CD), your money isn’t locked in your money market account for a specific term. Instead, you can access your money and use a linked debit card to make purchases or ATM withdrawals.

Cons of Money Market Accounts

Next, review some potential drawbacks to money market accounts:

Transaction limits. Depending on the financial institution, monthly transaction limits on electronic transfers and outgoing checks may be in place. For example, you might be limited to six withdrawals and transfers per statement period. If you exceed these limits, you might be on the hook for paying a fee or receiving a lower interest rate.

Opening deposit. Money market accounts typically require a larger chunk of change for the opening deposit. The amount depends on the bank but usually starts at roughly $2,500.

Fees. As with checking accounts, you may find yourself paying a number of fees that can eat away at the interest you earn.

Which Account Is Right for You?

When comparing a money market account to a checking account, a checking account may be a better fit if you intend to keep the funds for everyday use. Most people (82% or more of Americans) have a checking account, and it can be the hub of one’s daily financial life. Think of it as a well from which you’re constantly drawing water — you’ll enjoy unlimited access to withdrawals, transfers, and debit card spending.

It might also be a stronger fit if you’re looking for an account that requires a low minimum opening deposit and monthly balance thresholds.

If you have a larger sum of money to keep in an account, want to earn more interest, and don’t anticipate needing to make a lot of transactions, a money market account could be a better fit. It’s also important to look at the initial deposit requirement and monthly balance minimum before making your decision.

Using Both Account Types

Consider using both a checking and a money market account. For instance, you can use your checking account for your everyday spending and to set up autopay on some of your recurring monthly bills.

Your money market account can be linked to pay a few of your bills. If you don’t touch your money market account otherwise, you can stay within any monthly transaction limits that may exist and earn a higher rate of interest, perhaps even an APY that’s competitive with high-yield savings accounts.

The Takeaway

While checking and money market accounts do share some similarities, they have important differences. A money market may offer higher interest, but it could have higher opening deposit and balance requirements, as well as transaction limits. Which kind of account works best for you will depend on your preferences and your unique financial situation.

If you’re considering where to keep your checking and savings account, see what SoFi offers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Can a money market account replace checking?

It depends: A money market account can have limited monthly withdrawals. Plus, there might be a higher minimum opening deposit and monthly balance needed. That said, it could potentially replace your checking if you don’t typically make a lot of transactions with your checking account and the potential requirements mentioned don’t bother you.

Do money market accounts have debit cards?

Yes, money market accounts typically come with debit cards, which can make spending easier. Money market accounts might have monthly caps on the number of withdrawals and transfers, however. The limit, if it exists, can vary depending on the bank or credit union.

How do money market rates compare to savings?

Money market rates can be comparable to those of some savings accounts. To get the most competitive rate, you might find a money market that’s offering around what you’d earn with a high-yield account at an online bank (currently around 4.00% or even 5.00%).

Photo credit: iStock/PeopleImages