It's official: plastic is preferred over paper by most people in the United States. Debit cards, which are considered faster and more efficient, have almost replaced checks in our daily lives, with Business Insider reporting that financial transactions done by check have been dropping by about 1 billion a year. But while debit card transactions, which require no signing or book balancing, are no doubt easier to make transactions with, how does the safety of debit cards stack up against checks?
In the view of Prvacy Rights Clearinghouse, a non profit based in California that monitors financial privacy concerns, paying by debit card has its defnite risks. There is a lot of potential for card number theft. With the assistance of card skimmers, funds can be quickly withdrawn from a person's bank account by an untrustworthy cashier. In addition cashiers, when using a handheld card reader, can also secretly capture card data. PVC also adds that the riskiest places to use debit cards include restaurants, gas stations, outdoor ATM machines, and also online. Because they are not usually monitored regularly, card skimming and number-capturing by camera are the two biggest risks when it comes to outdoor ATM machines and gasoline pumps. Portable card skimmers utilized by dishonest servers are your biggest threat at restaurants. Online, card information can be compromised in a variety of ways, including malware and eavesdropping over unsecured wifi connections.
Hackers have also gained access to debit card numbers via the databases of large corporations that record transaction data. Security breaches, compromising millions of debit card numbers in thousands of retil locations, have been reported at Target, Michaels, Home Depot, TJMaxx and Nieman Marcus among other companies.
It's true that many banks offer a debit card guarantee, however, which ensures that your funds will be replaced as long as you comply with the requirements of your bank's program. However, PRC warns that debit card users should be aware that most banks are not obligated to restore your funds for at least two weeks while its investigation into the fraud is ongoing. For many people, PVC notes, that could pose problems with payments on rent, the mortage,or loans.
So what about checks? Because it's necessary to fill out a check for each transaction you make, and because it requires that you balance your checkbook each month, checks are clearly less efficient than debit cards. Yet many people are drawn to checks anyway, because of one major plus: they provide a paper trail. Most financial institutions provide a digital image of the front and back of each check used, which is not only useful for record keeping, but also peace of mind -- if you suspect fraud, you can prove it by using the physical record that you'v kept of your transactions. And for those who pay rent, or who are paying back loans, doing transactions by check means that they have an easily-accessible record that can help set the record straight if their landlord or lender questions whether or not they received their monthly payment.
But the security problems, according to consumer news website Remar's report, are similar to that of debit cards. Checks, just like debit cards, provide all the information a person needs to access your checking account. Giving checks or checking account information to people or businesses you don't know are reliable is a risk, as is sending checks through the mail. In addition, if you don't keep track of your transactions and balance your checkbook, it's easy to overdraw your account, which can be expensive, with banks charging for 'bounced checks' and also for overdraft protection.
The Uniform Commercial Code (UCC), a version of which has been coded into law by most states in the country, provides consumer protections against check fraud. To sum it up, the UCC holds the bank responsible for fraudulent checks as long as the customer is organized, exercising "reasonable" care, such as timely reporting.
If someone steals your checkbook or creates a counterfeit check using your account information, you can still reply on UCC laws for protection. But with digital processing becoming more and more popular, in many other ways things have changed. In lieu of getting all your cancelled checks, PVC notes that you could see the abbreviation "ACH" on your monthly statement. ACH, which stands for Automated Clearing House network, shows that your payment was processed "electronically," much like a debit card transaction. That means consumer protection falls under electronic transfer laws, and the federal government treats checks in the same way it treats debit card transactions when it comes to disputing fraud or other issues.
To put it all together, both debit card and check use pose risks. It's important to weigh the pros and cons before each transaction, and to keep your eyes and ears open for untrustworthy merchants and for possibly dangerous situations. Anytime you give sensitive account information to someone else, problems could follow. So, no matter which way you like to make your checking account transactions, remain a cautious consumer.