Help me minimize my card exposure
June 8, 2016 12:22 PM   Subscribe

A couple of weeks back, somebody cloned my debit card (I'm fairly certain it was skimmed, as the uses were all local) and used it to rack up some fraudulent transactions. Everything's sorted now, but I'd like to figure out how to establish a limited card I could use in cases that are higher risk while minimizing exposure should the card be compromised.

I am super not interested in carrying a wad of cash around, only prepaying for gas, and so on, but I'd also like to not be hamstrung and limited to cash only for a couple of weeks while the bank replaces my card like I recently have been.

There's a few ideas I've had for how to do this:
  • Set up a second checking account with its own card and keep only a bit of money in it. My bank's mobile app is outstanding and can be used to immediately and freely transfer cash from one account to another, so I can only put cash in when necessary. I'd still have to do the anti-fraud report and get the card replaced should it be compromised, but I'd still have access to my account without having to drive across town to my bank.
  • Keep a Visa giftcard on me at all times. This one's less appealing since they generally can't be reloaded and I don't relish the idea of spending $5 every time I spend $50-100 via the card.
  • Get one of those Paypal cards aimed at people without access to conventional banking services. You have to give the company your SSN to confirm your identity, which I'm not super-keen to do, and I'm not sure what kind of fees and terms would attach to this.
I will freely and cheerfully admit that I don't know a lot about this sort of thing and appreciate any tips, caveats, or corrections of gross misunderstandings I may have.
posted by Pope Guilty to Work & Money (25 answers total) 6 users marked this as a favorite
Have to ask, since you don't mention it- are you opposed to using a credit card? They generally have better fraud protection than debit cards.
posted by thewumpusisdead at 12:25 PM on June 8, 2016 [4 favorites]

I don't want to have a credit card if I can help it.
posted by Pope Guilty at 12:30 PM on June 8, 2016

Ok, well, another thing you could do is use your first idea with a different bank . It would slow down transfers, but it would give other advantages- like being able to use a different set of ATM or locations if your bank is not available. And it might help keep them separate when you get notifications through e-mail.
posted by thewumpusisdead at 12:34 PM on June 8, 2016 [1 favorite]

Have to say, the best answer is getting a credit card. But, the second best is probably your first idea. If you lose a gift card, you lose the money that's attached to it too. And, on preview, thewumpusisdead has another good idea. I can recommend Ally, since it's free and dead simple (and free ATMS everywhere).
posted by General Malaise at 12:36 PM on June 8, 2016 [1 favorite]

Visa has a page full of possible reloadable card options. Your bank really takes weeks to replace your card? I am also assuming you like your bank? But yeah if so a second linked savings account with a debit card should work just fine, good app to move money back and forth. But I'd push on your bank for the "weeks" thing, most banks I know will fedex that shit to you within a day or two when at all possible.
posted by jessamyn at 12:37 PM on June 8, 2016 [2 favorites]

Another solution, which you may not be able to implement, is: do not use your card at any location that does not support chip+pin. You only got skimmed because you swiped your card.

The rollout for chip hardware on the merchant level is slow and still very far behind, but should pick up over the summer. You could also see if your debit card works with Apple/Android pay.
posted by scolbath at 12:39 PM on June 8, 2016

I'm with Jessamyn on this one. Replacing a debit card should not take weeks. I've had to replace mine at least once over the past couple of years (because it got damaged) and I had a brand new one in the mail within a week. This was with a local credit union, though, so YMMV. I can't think of a legitimate reason why you should have to wait weeks for a new card.
posted by Roger Pittman at 12:40 PM on June 8, 2016

A credit card that you pay off every month is the best solution, simply because when someone goes on a spending spree with a clone of your credit card, no money ever leaves your account. Even if your bank is good about refunding your chequing account when debit card fraud occurs, if the day of the shopping spree was also the day that your rent or mortgage was due, it can cause hassles (which a good bank will help you with... but who needs the hassle in the first place?)

While there are lots of valid reasons not to get a credit card, if your reason is related to avoiding the ability to get too far into debt, know that you can ask the card provider to give you an arbitrarily low limit (like, say, half of your discretionary income for the month).

If a credit card is not an option, I would go with the second checking account that you keep <>
Visa gift cards can be a pain in the butt, especially if you use them at gas stations or hotels (where, at least around here, standard practice is to put a "hold" on the card) that might not drop off as fast as you need it to.
posted by sparklemotion at 1:05 PM on June 8, 2016

It may be worth contacting your bank and asking what fraud prevention and support services are available to you as a current customer....and then calling around and finding out what other banks offer. (For example, some bank branches can issue a temporary card on site.)

I think you'd see more satisfying results from trying to improve your post-fraud experience than from guessing where fraud will come from next.

(Here's one reason why people are asking if you'd consider a credit card.)
posted by gnomeloaf at 1:12 PM on June 8, 2016

I used to have no credit cards, by choice. I hate to tell you, but it turned out to be a dumb choice even though it sure seemed like the best choice for me when I made it.

The biggest problem with using a debit card is that you have no access to the funds that were in you account before the fraud happened until it's completely resolved. And it can take weeks to get the funds back. This really, really fucks with your ability to do things like, oh, I dunno, pay rent. Or utility bills. And when you have everything set to auto debit and somebody clones your card and wipes out your checking account all your utility payments will bounce and ugh. I was unemployed when it happened to me, so I have experienced the worst sort of this problem. DO NOT DO THIS.

A secondary problem is that when you have no credit cards, you have no credit history, and it limits your ability to, say, rent an apartment from one of the bigger property management companies, because they'll look up your credit history, see you don't have one, and deny your application to rent from them.

Another problem is that while you can rent a car using a debit card, you have to pay a deposit (rather than just having a hold on the card), usually in the $300-$600 range, and again, you don't have access to those funds while they're tied up in the deposit. And the refund takes up to a week to process, so you'll be waiting for your funds long after you end the rental.

Gift cards seem smart until you try to use them online, because the pre-authorization will often fail. You'll also have problems with holds: they don't seem to release properly, so if a site does a $1 pre-auth before running a $50 charge, and you have $50 on the gift card, the transaction will fail because only $49 is available (worse, when you resubmit after a failure, they pre-auth another $1 and you're down to $48 on the card).

If you have a bad personal history with credit (as I did) then what you'll need to do is set up what's called a secured credit card (of the major card companies, I think Citibank and Capital One still issue them). You send them some amount of money and they give you a credit limit equal to the amount you sent. In effect it's a little like having a debit card since you literally can't go over the limit, but you get fraud protection and don't have to lose access to your funds.

So, I'm sorry to be telling you to do the thing you say you don't want to do, but do the thing you say you don't want to do. Debit cards are bad, m'kay?
posted by fedward at 1:36 PM on June 8, 2016 [8 favorites]

My card should've been to me in a few days, but a) the fraud prevention folks I spoke to fucked up and never actually put in the request to replace the card and then b) Memorial Day happened in the middle of the period when they were actually replacing the card.

Another solution, which you may not be able to implement, is: do not use your card at any location that does not support chip+pin. You only got skimmed because you swiped your card.

One of the most goddamned infuriating parts of this is that the clone was successfully swiped at several places that I know for a fact have chip and pin setups, which nobody I've talked to could explain to me.
posted by Pope Guilty at 1:39 PM on June 8, 2016 [1 favorite]

Chip and pin should be as simple as 'jam your card in the bottom of the machine until it beeps and says 'enter pin', wait until it beeps and says 'extract card'. My guess is that the merchant hasn't turned support on yet, but nothing prevents you from trying it.

What you are experiencing is simply a byproduct of the fact that we are in the last days that skimmers will be effective, so the thieves are going crazy before the door closes on them. My credit union effectively blacked out the use of any of their debit cards in a few complete *states* because of this - which I discovered to my chagrin! Fortunately, unlike you, I had a credit card.
posted by scolbath at 1:48 PM on June 8, 2016

Also note, Chip and PIN isn't really a thing in the US yet. With the exception of Barclaycard (which has only recently launched in the US) all the major providers are issuing Chip and Signature cards. Even people who want Chip and PIN can't get it.

That said, Chip-and-Signature (which I personally think is dumb) would still prevent the easy sort of magstripe cloning, but only in 37% of retail terminals. The other 63% are still only accepting swipes, even from chip-enabled cards.
posted by fedward at 1:56 PM on June 8, 2016

I'm going to Nth that a credit card with a low limit is definitely your best option for accomplishing your goals. Fedward put forward the most compelling arguments I could make so I won't repeat them.

However, if you're dead set against that, I'd open a second checking account with a separate debit card. Make absolutely sure that the bank will decline transactions rather than doing some sort of overdraft protection using your other accounts if the account runs low on funds, or you'll land yourself in deeper trouble with overdraft fees while the fraudster parties with your card. You will also need to make sure that whatever is in that account is money that you can afford to live without while your bank takes care of things if fraud does happen. At this point though, you're basically doing a secured credit card with none of the usual credit card upsides, so I'd just do that instead.
posted by Aleyn at 2:01 PM on June 8, 2016

Chip and PIN actually DOES work, *if* your card is a debit card.

fedward, those statistics are amazing when you factor in that as of last October, the burden of fraud proof flipped over to the merchant - 100%. Unless they aren't enforcing it???
posted by scolbath at 2:05 PM on June 8, 2016

There may well be a smaller local bank that offers no-fee withdrawals on other banks' ATMs (to compensate for their own relative few machines). I used to have a second account like that for other reasons. But really everyone is right: the credit card puts another layer between the world and your precious precious cash. I pay my cards off once a month and use my debit card for purchases about exactly never.
posted by praemunire at 2:11 PM on June 8, 2016 [2 favorites]

Some credit cards and some debit cards allow you to "freeze/unfreeze" or "block/unblock" them via a mobile app. While frozen, no transactions are allowed. If you want a card solely for a few more high-risk situations, consider looking for one that allows this option, and keep it frozen except for when making those purchases. I'm afraid I don't know a good way to find all banks that offer this feature, though.
posted by whatnotever at 2:46 PM on June 8, 2016

Chip and PIN is still wicked-easy for a merchant to bypass at most places in the US. It may not help with your GRAR about the issue, but it might explain it.
posted by ersatzkat at 2:47 PM on June 8, 2016

Idea #1 has been working great for me: After the Target Red Card debacle (the Target Debit card was attached to my main checking account), I created a separate checking account at my online bank that keeps $200 in it and only $200 in it. I use this account for Paypal transactions as well, or anything that requires me to enter a bank account number online.
posted by getawaysticks at 2:47 PM on June 8, 2016

I went with option 1 when my debit card was compromised online a couple years ago and I haven't looked back. It's super simple - I have 3 accounts at the same (small, local) bank: 2 checking and 1 saving. My only debit card is attached to one of the checking accounts. There's no overdraft allowed, and I just about never put more than $100 in that account. It's easy to transfer between accounts on my phone or in person, but it's impossible with the debit card. I use the other checking account for my automatic paycheck deposit and for preset monthly bills. If they get my debit card, they aren't going to get much and it can't drain my savings. It's worked well for about 3 years or so, I recommend it.
posted by mygothlaundry at 3:50 PM on June 8, 2016 [1 favorite]

I also went with option one. My main account doesn't have a debit card attached at all. It's just and old-school atm card. You can request one from your bank, although they never offer it.
posted by snickerdoodle at 3:53 PM on June 8, 2016

Another vote for a credit card, and a note that you don't need to wait until the end of the month to pay the bill. I put everything on a credit card (mostly for the points, but the security aspect is good too), and pay it off weekly.
posted by COD at 4:23 PM on June 8, 2016

those statistics are amazing when you factor in that as of last October, the burden of fraud proof flipped over to the merchant - 100%. Unless they aren't enforcing it???

In some cases the merchant can't afford the up front cost and they're on the hook for losses. I've read that some merchants have equipment but their processors aren't ready (with systems, software, whatever). In those situations the processors have said they'll assume the risk.
posted by fedward at 4:53 PM on June 8, 2016

If you really REALLY don't want a credit card (although for your purposes and for low-key building credit, it is not a terrible idea), is it possible to open up another checking account for free through your bank? You could transfer money from your primary account to this new checking account and only use that one for your everyday purchases.

With the secondary checking account, you can choose how much money goes into that account they way you could with a prepaid card, but it's a little more "official". But also if you lose that card or if your data gets swiped, there's only a limited amount of money that could be lost, and you have your primary debit card as a backup in the meantime while your new one is delivered.
posted by helloimjennsco at 6:31 AM on June 9, 2016

That's pretty much what seems like the best method to me, alongside a credit card.
posted by Pope Guilty at 2:56 PM on June 9, 2016

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