Teen Debit Card Suggestions?

[LuvOrlando]

^^ I agree, have had several issue with my debit card and the bank will only indirectly admit it isn't as secure as a credit card. I have no idea why they are different and they have always been vague about it. But now I only use my debit card to get cash from an ATM machine.

The difference is that credit cards absorb all the liability in the case of theft in exchange for charging very high interest rates. If you are robbed via a credit card the baking institution pulls that debt out of your name into a sort of holding space until theft is verified. If the investigation verifies the purchase was not, in fact, you then the bank just absorbs the loss.

Now if the same thing happens with a debit card attached to your bank account it is like being mugged in the street. In this case the bank has zero liability for your bad luck, no-one is giving you your money back unless the thief can be hunted down and the funds recovered in their possession and ALL the money pulled from your account stays lost unless recovered by the system. Of course, you will get whatever help can be offered but the chances are about as likely as getting cash back from a dropped wallet. This is why we have insulated debits for day to day use walled off from all other funds, true savings are completely cut off but there is a day to day checking and a day to day backup savings linked with a reasonable amount in it to cover normal expenses & overages to avoid fees. To be careful the day to day debit should contain acceptable loss money, meaning in case you are robbed, well, what dollar amount can you live with losing? In NYC I used to carry around an extra $20 cash and call it mugging money, meaning this money was set aside and an amount that would appease a mugger that I was willing to lose in exchange for my decision to live my life as I wanted, as in going to nightclubs with friends. To me what is in my day to day debit is the same as mugging money.

 

[amylevan]

The difference is that credit cards absorb all the liability in the case of theft in exchange for charging very high interest rates. If you are robbed via a credit card the baking institution pulls that debt out of your name into a sort of holding space until theft is verified. If the investigation verifies the purchase was not, in fact, you then the bank just absorbs the loss.

Now if the same thing happens with a debit card attached to your bank account it is like being mugged in the street. In this case the bank has zero liability for your bad luck, no-one is giving you your money back unless the thief can be hunted down and the funds recovered in their possession and ALL the money pulled from your account stays lost unless recovered by the system. Of course, you will get whatever help can be offered but the chances are about as likely as getting cash back from a dropped wallet. This is why we have insulated debits for day to day use walled off from all other funds, true savings are completely cut off but there is a day to day checking and a day to day backup savings linked with a reasonable amount in it to cover normal expenses & overages to avoid fees. To be careful the day to day debit should contain acceptable loss money, meaning in case you are robbed, well, what dollar amount can you live with losing? In NYC I used to carry around an extra $20 cash and call it mugging money, meaning this money was set aside and an amount that would appease a mugger that I was willing to lose in exchange for my decision to live my life as I wanted, as in going to nightclubs with friends. To me what is in my day to day debit is the same as mugging money.

Not entirely true. As long as you report your card/funds stolen, your liability is limited. You’re limited to $50 liability for anything done before you reported, and nothing after you report. You are fully liable for anything more than 60 days not reported.

So yes, you are more thoroughly covered from theft with a credit card. But you do have some protections with a debit card. It’s not as bad as being mugged. You do need to keep an eye on your funds though.

 

[kdonnel]

Not entirely true. As long as you report your card/funds stolen, your liability is limited. You’re limited to $50 liability for anything done before you reported, and nothing after you report. You are fully liable for anything more than 60 days not reported.

So yes, you are more thoroughly covered from theft with a credit card. But you do have some protections with a debit card. It’s not as bad as being mugged. You do need to keep an eye on your funds though.

The reason I push for people to use credit cards instead of debit cards is in the case of fraud:

With a credit card, the card issuer must fight to get its money back. With a debit card, you must fight to get your money back.

That to me is a very important distinction.

Debit card fraud​

According to the EFTA, your potential liability for fraudulent debit card transactions is virtually unlimited. You have up to 60 days to report a lost or stolen card under the EFTA. After that, you simply lose whatever money was taken, even funds siphoned from linked accounts. The exact liability limits under the EFTA are:

• Lost or stolen card reported before unauthorized transactions: zero liability.
• Lost or stolen card reported within two days: $50 liability limit.
• Lost or stolen card reported within 60 days: $500 liability limit.
• After 60 days: no protection.

It's important to note that if your card is not physically lost or stolen, you have 60 days to report fraudulent transactions with zero liability. If only your card number is stolen, the 60 days start from the date of the statement on which a fraudulent transaction appears.

Credit card fraud​

Under the FCBA, your maximum liability for fraudulent credit card transactions is $50. If you report your card lost or stolen before any fraudulent transactions occur, your liability is zero. Many credit cards promise zero liability for all fraudulent transactions.

The real difference between a debit card and a credit card when it comes to fraud is in how you get your money back. When a fraudulent transaction occurs on your credit card, you have lost no money. You can report the fraud, get a credit on your statement, and the issue will never affect your bank account.

With a debit card, your bank account balance is affected from the moment the fraudulent transaction takes place. If the transactions are significant, you could experience a domino effect of financial headaches. Fraudulent charges can tie up funds so that legitimate charges are declined or cause overdrafts.

https://www.nerdwallet.com/article/credit-cards/credit-card-vs-debit-card-safer-online-purchases

 

[LuvOrlando]

Not entirely true. As long as you report your card/funds stolen, your liability is limited. You’re limited to $50 liability for anything done before you reported, and nothing after you report. You are fully liable for anything more than 60 days not reported.

So yes, you are more thoroughly covered from theft with a credit card. But you do have some protections with a debit card. It’s not as bad as being mugged. You do need to keep an eye on your funds though.

Cool, ChatGPT search revealed that there was, in fact, a law passed. There started to be rolling protections offered way back from its inception in 1978 with EFTA, but I guess my small banks had loopholes. There were many changes that lead to what it is now, which is fantastic. You are correct, thanks for the new information!

"At that time, the general rule established by the Electronic Fund Transfer Act (EFTA) was that if you report the loss or theft of your debit card within two business days, your liability for unauthorized transactions would be limited to a maximum of $50. If you report the loss or theft after two business days but before 60 calendar days, your liability could be up to $500. If you fail to report the unauthorized transactions within 60 days, you might be held liable for the full amount."

I still wonder though, how long a person is without the money in their account and how much damage can be done in that window. Like, does your credit rating get restored for missed payments due to verified theft? Can, say, an eviction or foreclosure be overturned due to the theft? How big is the umbrella? Credit cards might still be safer overall when spending in high risk environments.

 

[amylevan]

I still wonder though, how long a person is without the money in their account and how much damage can be done in that window. Like, does your credit rating get restored for missed payments due to verified theft? Can, say, an eviction or foreclosure be overturned due to the theft? How big is the umbrella? Credit cards might still be safer overall when spending in high risk environments.

Yes, credit cards are going to be safer overall. Yes, you’re going to be without money until everything is sorted. And no, I’m not sure id want to find out how big the umbrella is.

I was merely pointing out that you aren’t completely without hope if your debit card is stolen. There are more protections than a mugging.

 

[CdnCarrie]

I've used a debit card almost exclusively (with some credit card use) since the early 1990s without ever a single issue.

 

[disneydreamer1980]

My older kids all have capital one debit accounts linked to ours snd it’s so easy, if they need money I can go into my app and just transfer money into their accounts, I can see every purchase they make and they’re unable to zelle money from their accounts, but otherwise it functions like a normal bank account. I deposit their allowances directly into their accounts.

 

[wenrob]

The difference is that credit cards absorb all the liability in the case of theft in exchange for charging very high interest rates. If you are robbed via a credit card the baking institution pulls that debt out of your name into a sort of holding space until theft is verified. If the investigation verifies the purchase was not, in fact, you then the bank just absorbs the loss.

Now if the same thing happens with a debit card attached to your bank account it is like being mugged in the street. In this case the bank has zero liability for your bad luck, no-one is giving you your money back unless the thief can be hunted down and the funds recovered in their possession and ALL the money pulled from your account stays lost unless recovered by the system. Of course, you will get whatever help can be offered but the chances are about as likely as getting cash back from a dropped wallet. This is why we have insulated debits for day to day use walled off from all other funds, true savings are completely cut off but there is a day to day checking and a day to day backup savings linked with a reasonable amount in it to cover normal expenses & overages to avoid fees. To be careful the day to day debit should contain acceptable loss money, meaning in case you are robbed, well, what dollar amount can you live with losing? In NYC I used to carry around an extra $20 cash and call it mugging money, meaning this money was set aside and an amount that would appease a mugger that I was willing to lose in exchange for my decision to live my life as I wanted, as in going to nightclubs with friends. To me what is in my day to day debit is the same as mugging money.

People keep saying this but in my experience it’s just not true. Over three decades and three banks/credit unions we’ve had it happen 4-5 times. The first time they drained our entire account. We got our money back within 24 hours of reporting it. The bank itself caught it twice and the last time I just had to prove my DH wasn’t in two different states at one time which was easy enough. Every time we’ve gotten our money back with little to no hassle. I don’t know anyone who hasn’t gotten their money back after being hit.

 

[amylevan]

As this is a question of a teen debit card, I’d point out that they aren’t going to be out a mortgage payment if something happens. In the (I would say unlikely) event that their card is stolen, they aren’t going to not have the money for a car or mortgage payment.

So I’m not sure the “they could have their card stolen” is really a huge detractor in a decision for a teen.

 

[LuvOrlando]

People keep saying this but in my experience it’s just not true. Over three decades and three banks/credit unions we’ve had it happen 4-5 times. The first time they drained our entire account. We got our money back within 24 hours of reporting it. The bank itself caught it twice and the last time I just had to prove my DH wasn’t in two different states at one time which was easy enough. Every time we’ve gotten our money back with little to no hassle. I don’t know anyone who hasn’t gotten their money back after being hit.

What bank? Are you dealing with a big name bank? I always used small local banks in my community for better rates are better customer service but things changed a ton the past ten years or so where nothing was better anymore. Regardless, the banks I historically favored were never ever helpful with this part of things so I was paying a few dollars a month to maintain a pin access only debit only card, these seem to have vanished now. Had them for my kids though with student accounts and it all was great, until it wasn't. Only recently we switched to USAA who seems way more on the ball and runs a tight ship as far as I can tell. We switched because our local bank, which changed hands 3 times, started behaving less and less responsibly without any accountability. I am not sure how our new bank handles theft but I suppose I should ask. No matter what I am still going to keep real money walled off, I just don't trust anyone enough to put all the eggs in one basket, if you do rock on, but it is a thing I will avoid.

 

[leahgoogle]

Never got debit cards for the kids.

We opted to add them as authorized users on one of our credit cards.

Helps build their credit and has advantages over a debit card.

This is what we have done.

 

[kdonnel]

As this is a question of a teen debit card, I’d point out that they aren’t going to be out a mortgage payment if something happens. In the (I would say unlikely) event that their card is stolen, they aren’t going to not have the money for a car or mortgage payment.

So I’m not sure the “they could have their card stolen” is really a huge detractor in a decision for a teen.

Teen accounts are often linked to parents accounts at the bank level.

A lost teen card can result in a drained parents account.

 

[wenrob]

What bank? Are you dealing with a big name bank? I always used small local banks in my community for better rates are better customer service but things changed a ton the past ten years or so where nothing was better anymore. Regardless, the banks I historically favored were never ever helpful with this part of things so I was paying a few dollars a month to maintain a pin access only debit only card, these seem to have vanished now. Had them for my kids though with student accounts and it all was great, until it wasn't. Only recently we switched to USAA who seems way more on the ball and runs a tight ship as far as I can tell. We switched because our local bank, which changed hands 3 times, started behaving less and less responsibly without any accountability. I am not sure how our new bank handles theft but I suppose I should ask. No matter what I am still going to keep real money walled off, I just don't trust anyone enough to put all the eggs in one basket, if you do rock on, but it is a thing I will avoid.

We belong to a credit union at the moment. I don’t use my debit card at all anymore and DH only uses his for ATM withdrawal every few months. So little that he has to be reminded of the pin. We use credit cards almost exclusively so not putting all our eggs in one basket. (When my account was drained was when debit cards were a brand new thing and internet banking wasn’t a thing.) I was just disagreeing that it’s like getting robbed with no chance of recovery. That’s never been my experience or that of others I know.

 

[ronandannette]

People keep saying this but in my experience it’s just not true. Over three decades and three banks/credit unions we’ve had it happen 4-5 times. The first time they drained our entire account. We got our money back within 24 hours of reporting it. The bank itself caught it twice and the last time I just had to prove my DH wasn’t in two different states at one time which was easy enough. Every time we’ve gotten our money back with little to no hassle. I don’t know anyone who hasn’t gotten their money back after being hit.

This is very similar to the experience we had. The bank informed us of the fraud and as for proving it wasn't us that had made the off-shore transactions, all they required was our notarized affidavit.

 

[NotUrsula]

I also use the Capital One "Money" option for my teen for her normal spending, linked to my credit card account with them. She does use it online, but there is never more than about $100 in that debit account, so the loss would not be a big deal if someone managed to hack it. This one is all for her to manage.

Her brother was added as a full authorized user on one of my credit card accounts once he graduated from High School, but he doesn't actually pay that bill; it's for emergency use. (I do sometimes give him permission to use it for items that are gifts from me, as well.) Because he shares the card, he gets the benefit of my credit history, so his score is excellent. DD will also be added that way once she finishes high school, but for now she still lives at home and doesn't travel out of town unless with a chaperoned group, so I'm holding back on that option for the moment.