Do you realize which card carries the most risk? A stolen credit card or a stolen debit card? Without a doubt a stolen debit card carries more risk.

Federal law says that you can only be held liable for $50 of fraudulent charges on your credit card. Many banks will waive that charge.

According to www.federalreserve.gov if your debit card is stolen your loss is limited to $50 --- but you have to tell the financial institution within two days after learning of the loss or theft of your card. If not, you could be held liable for $500.

There’s more. If you let the unauthorized transaction go unreported more than 60 days after it appears on your statement, you are liable for all the charges! However, if you check your bank account transactions online at least once a week, you are going to know what is going on with your account.

There’s an even bigger problem with the debit card. The thief can clear out your entire bank account by using your PIN at an ATM. This leaves you with no money to pay your bills. Granted, the bank could cover most of your losses and return money to your account, but that will take time to do the necessary investigation.

Also, because the money for your transaction with a debit card is taken at the point of purchase, you could possibly run your balance too low and end up with an expensive overdraft charge.

Some people argue that it is better to use a credit card because you are using someone else’s money until the statement is due. So, if you are charging at the beginning of the billing cycle you have a month to use someone else’s money.

I like to use a debit card for those small dollar amount transactions. You don’t have to carry as much cash, plus you don’t have a bunch of small transactions on your credit card to check at statement time. Plus, many times businesses don’t like you to make charges for a small purchase.

In my wallet you will find both credit cards and a debit card. They each meet different needs. What works best for you? Why?