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Target breach worse for debit card users, expert says

By Bill Gephardt | Posted - Dec. 23, 2013 at 8:40 a.m.


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SALT LAKE CITY — Target is very much in damage control mode following last week's announcement of the nation's second-largest data breach.

Someone or a group of people stole credit or debit card information for tens of millions of Target customers. It serves as a good reminder to use a credit card instead of debit card when purchasing things.

Gone, just like that. The hack into Target's network means information such as names, card numbers, expiration dates, even those security codes on the back of cards are compromised.

Victims who used a credit card will not be on the hook for fraudulent charges racked up by identity thieves.

"Sure there might be some logistical challenges, hassle involved. But people aren't going to lose any money because of it," said John Kiernan, senior analyst at Cardhub.com.

Kiernan said the hassle is much greater for debit card users.

"We always recommend making a credit card your primary spending vehicle," he said.

The biggest reason — your debit card is tied to your bank account. When it is compromised, the hard-earned money that you are living on can vanish. You will get it back eventually, but that's money you can't use now to pay bills and buy groceries. You have to fight to get it back.

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If your credit card is compromised you still have to fill out forms, but it's credit, not actual money. So, as you fight to straighten it out, you can still pay your bills.

Kieran recommends that people who use a debit card stash away emergency money in case they are hit by fraud.

"Have another account, savings account, that you can tap into just so you can meet your temporary bills," he said.

If you can't let go of your debit card, run it as a credit card so you'll sign for your purchase. That signature gets you more favorable fraud protection because banks charge merchants more than they would if you entered your PIN.

"With a PIN debit transaction, you're unlikely to have that kind of blanket reassurance of being covered. So when in doubt, just sign. Also when in doubt, use a credit card," Kieran said.

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Bill Gephardt

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