Debit Cards and Auto Drafts

There have always been two things that worry me about our banking system, and that is debit cards, and checking auto drafts. Both are convenient, but both deduct directly from your account so any fraud or screw up can wipe out your money.

Today I came across this article on KrebsOnSecurity that showed how easy it is to compromise an ATM or credit card terminal:

In the article Brian Krebs mentions this:

I realize a great many people use debit cards for everyday purchases, but I’ve never been interested in assuming the added risk and so pay for everything with cash or a credit card. Armed with your PIN and debit card data, thieves can clone the card and pull money out of your account at an ATM. Having your checking account emptied of cash while your bank sorts out the situation can be a huge hassle and create secondary problems (bounced checks, for instance).

This is what worries me. Best case scenario your bank will limit them to a max withdrawal of $250 a day through an ATM, but 70% of Americans have less than $1,000 in savings1 which means it cause you tons of heartache and stress.

Checking auto-drafts are probably even worst because there is no limit. Someone could drain the entire account, and you are at the mercy of the bank. Not a place I want to be.

The only alternatives are what Brian mentions. Pay by real cash or a credit card, but this leads to a ton of problems for most Americans. Cash is no longer convenient, and it’s too easy to spend over your monthly budget on a credit card. Putting you into a debt spiral that everyone knows is impossible to get out.

The only solutions that I’ve read are to continue using a debit card but only use it at terminals that read the chip. You know the ones that take an hour and then beep at you until you remove the card. Unfortunately, for my area, no gas pumps have this.

I know reading this on a random blog post isn’t going to change your habits, but I think it’s worth remembering how you can be scammed and be prepared. Unlike Equifax, if we get hacked we experience bad ramifications.


  1. According to a survey by GoBankingRates, 69% of Americans have less than $1,000 in savings.