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Five places to avoid using a debit card while traveling

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Don't hand your card over to just anyone on vacation. (iStock)

Packing for your next trip? Consider leaving your debit card behind. Just one swipe could ruin your vacation or business trip.

Security breaches like last December’s hack of Target stores have raised awareness of the dangers of using debit cards, but security and financial experts say many people are still in the dark about their risk – especially away from home, when they are already higher targets for theft.

“People love to waive security for convenience, and people love to use debit cards for convenience,” said Frank Abagnale, a Washington, D.C.-based security consultant who works closely with the FBI and was portrayed in the 2002 movie Catch Me If You Can. “With a debit card, you’re basically exposing your money in your account every time you use it.”

A savvy fraudster can quickly drain the account your debit card is tied to, and if you don’t report unauthorized use right away – which can be hard while traveling, especially overseas – you could lose all the money in your account, according to the Federal Trade Commission.

If you become a victim, you’ll likely have to wrangle with your bank to fix the situation. And “even if you get your money back, you’re looking at cash flow problems, bounced checks and problems with your credit,” says Beverly Harzog, an Atlanta-based credit card expert and author of Confessions of a Credit Junkie.

The solution, the experts say, is to use a credit card instead, because federal law limits your loss from credit card fraud to just $50, and you have 60 days to report it. But if you must use a debit card, make sure to avoid swiping it at the following places:

Gas Stations 

Gas stations are an easy target for thieves, because people are always trying to get in and out quickly, meaning the thieves (and the devices they use) are much more likely to go unnoticed. They install skimmers into pay-at-the-pump machines to read and capture the information on your card, and they use tiny cameras to steal your personal identification numbers (PINs) when you punch them in. So while you’re fueling up for that long road trip, they can be draining your bank account for a long spending spree.

Harzog recommends paying inside if you must use a debit card. And if you can’t avoid paying at the pump, shield the keypad with your hand when typing in your PIN.

Restaurants

Eating out is a significant part of the travel experience, but make sure your meal is memorable because of the food and wine, not because that’s when your card got compromised.

The payment process for card-using customers is the same at most restaurants. The server takes your card and runs it, out of sight, on a machine. This always increases the possibility that your information may be stolen, but using a debit card puts your entire bank account at risk. 

And what about those handheld credit card devices that are popular in places like the U.K.? They’re not as safe as they might seem.

 According to Abagnale, many of those devices aren’t encrypted because of the extra cost involved. “If you buy them unencrypted, they’re about $500 each,” he said. “If you buy them encrypted, they’re about $1,200 apiece. … And the purchasing agent’s job is to purchase things for as little money as possible.”

Jelena Ewart, credit and banking manager for Nerdwallet.com, makes a case for using cash, especially in smaller restaurants, because with any card “there will be a foreign currency fee and a transaction fee, and it will be really hard to track those, and it’s easy to get lazy. You won’t even be incentivized to look at your statement.”

If hunger strikes on your flight, however, here’s some solace: United, Delta, American and Southwest say their flight attendants use encrypted handheld devices.

Standalone ATMs

 That innocent-looking ATM in the hotel lobby might look like a convenient place to grab some cash, but think twice before dipping your debit card – especially if the machine isn’t affiliated with a major bank.

 “These are private companies that go to the hotel and say, ‘I want to put this in your lobby and you’ll get a percentage,’ and a lot of those are scams within themselves,” Abagnale said. “They are not very secure machines, so they are easy to hack into. I always avoid those machines.”

 A safer bet are the ATMs located at major bank branches – but be sure to check for skimming devices before putting your card in. Abagnale recommends avoiding ATMs that have anything protruding from the area where you insert your card. Such a protrusion could indicate a skimming device.

Car Rental Counters

A little-known fact for travelers renting a car: When customers use a debit card to reserve a vehicle, the rental company will usually run a credit report to cover themselves against loss of or damage to a piece of their expensive inventory.

And that credit report can spell trouble for your credit score.

Each company is different. Avis/Budget, for example, runs a credit check.  Hertz performs only “soft inquiries” when customers use debit cards. That’s the same sort of inquiry that occurs when you check your own credit report or when a credit card issuer prescreens you before sending an unsolicited credit card offer. Unlike “hard inquiries,” soft inquiries don’t affect your credit score.

But there’s another downside to using a debit card: Rental companies will also put a hold on some of your funds, usually about $200 (or more), until you return the vehicle. And banks often don’t release those funds until several days later, which can wreak havoc on a trip if you need that money.

The bottom line: Take car rental companies at their word that renting a car without a credit card can be a “major obstacle,” as Thrifty plainly states on its website.

Hotels

Tina Gibson, a Washington, D.C.-area graphic designer, learned a hard lesson on a long road trip with her family years ago. Like car rental companies, most hotels put a hold on a certain amount of their debit-paying guests’ funds to cover incidentals like room service and minibar fees (even if guests don’t use them). 

“Turns out, our bank account was nearly emptied on our first trip because every hotel every night along the road was holding money when we checked in and then pulling money when we checked out,” Gibson said. “The bank didn’t release that first hold until days later. That certainly didn’t happen to us again!”

Another incentive for avoiding the debit card for hotel reservations: Many credit cards offer points-based programs and cash-back deals that can save customers big-time dollars.