Don’t let plastic cards melt hard-earned cash

Imagine if you are at a shop in a big mall and find yourself without enough paper currency to pay for your purchase. So, you open your wallet, purse or your handbag to sift through the plastic payment cards, of which you have at least a couple or more and, which comprise of at least one credit card and at least one debit card. To your shock and dismay, you realise that your debit card, only one or one of multiple, is missing. The last time you used your plastic – debit or credit – card was more than 10 days back.

Such a scenario is indeed possible with more than one card users. If you are not the kind of banking customer who is receiving SMS alerts of transactions on your debit card and credit card, then the scenario will very likely stand exposed to the grave risk of fraudulent purchases (online or offline). If it happens on your debit card then the entire balance from your savings account can be wiped out. Daily purchase limits will also not help if you notice your card loss after many days and fraudulent use occurs to every day in that period.

The biggest risk in all plastic cards, debit or credit, arises when a customer loses the card and his or her signature is there on the card to be easily forged and misused at merchant shops. It may be difficult to eliminate the risk of fraud altogether but here are a few things you can do to mitigate it. To begin with, consider the credit limit available on your credit card as the amount at risk and set the maximum credit limit as per your comfort level even though it may be much lower than what your credit card-issuing bank is willing to give you.

Unfortunately, the feature of maximum drawable limit on purchases is not there in debit cards as it is not provided by either Visa, MasterCard or any of their card-issuing banks. You, or another person who steals your debit card or finds your lost debit card can effect purchases up to the amount you have in your debit card-issuing bank’s saving account.

This makes debit cards inherently riskier than credit cards. In the current scenario where a couple of banks are offering a high interest rate of 7 per cent on their savings account, it is likely you may have more than one savings bank account.

If this is the case, do not opt to receive debit-cum-ATM cards from all banks. Tell the bank you need only a pure ATM card for the purpose of ATM-related transactions only, such as withdrawals and mini-statement. Subject to Reserve Bank of India's rules, your bank does not have a strong case to insist on giving you a debit-cum-ATM card, which increases the risk of losing money for you.

If you are still stuck with multiple debit-cum-ATM cards then register yourself for receiving SMS-based alerts on debits in you savings account as any debit card transaction results in a debit of your savings account. This way, a fraudulent transaction on your debit will send a SMS to you, which you can see to be one not authorised by you and take action immediately.