American consumers are using debit cards more than ever before. For example, the total number of debit card transactions in 2003 was 15.6 billion. By 2012, that number had more than tripled to 47 billion.

Why the Move to Debit Cards?

The increase in debit card usage can be attributed to three principal factors:

  • The recession of 2008: For many Americans, the banking crisis of 2008 meant either a sharp decrease in home equity or outright foreclosure of their homes. It also meant the depletion of pensions and retirement funds. These and related circumstances created increasing concern about credit scores and the burden of credit card debt.
  • Student loans: Recent college graduates are carrying excessive student loan debt. By 2013, total student loan debt had surpassed total consumer debt and average student loan debt increased by 58 percent, according to FICO between 2005 and 2012, making young Americans more wary of credit cards. According to a survey from bankrate.com, 63 percent of Americans age 18 to 29 don’t own a credit card. Another survey from creditcards.com found that the same age group prefers debit cards to credit cards by a margin of three to one.
  • The belief that debit cards are safer: Debit cards protect their users from spending more than they have in their bank accounts. This has created a related perception that debit cards also provide greater protection from fraud and identity theft.

The Downside of Debit Cards

Most users of debit cards are unaware of both how they work and the inherent risks they pose for fraud and identity theft. Regarding how they work, unlike fraudulent charges to a credit card, those from a debit card draw real money from your checking account. In addition, whereas charges to your credit card can typically be quickly resolved pending an investigation by your bank, debit card users can be out $500 or more if they don’t notice the fraud within two days.

Equally important, debit card theft has become increasingly pervasive, with thieves concocting ever more sophisticated means to obtain personal information. That information can be used to steal money from users’ bank accounts and, even worse, to steal the user’s identity.

How Debit Card Users can Protect Themselves

In general, there are three ways in which debit card thieves obtain personal identification numbers (PINs) and other debit card information to steal money from debit card users. Knowing how thieves operate can help owners of debit cards protect themselves:

  • Stolen PIN numbers: Debit card users frequently make the mistake of writing down their PIN and keeping it somewhere they perceive as safe, like their wallet or purse. Users can protect themselves by simply memorizing their PIN number rather than writing it down. Users should create PIN numbers that are easy for them to remember, but hard for thieves to guess. If they still forget their PIN, they can always call the bank to retrieve it.
  • Avoiding skimmers: Skimmers are devices that can read the information on a debit card much like the machines used to swipe cards at retail stores and are small enough to fit into the palm of the hand. Debit card users can protect themselves from thieves who use skimmers by being watchful during every transaction, not giving their card to any unauthorized person and never letting their debit card out of their sight, even at trusted establishments.
  • Being watchful at ATMs: Thieves often steal debit card information at ATMs. Sometimes they stand close to the person withdrawing money and use small cameras to record information on the debit card and the numbers punched into the keypad. They also install cameras to record this information even when they are physically absent from the scene. Debit card users need to be wary of anyone who’s standing in close proximity to them at ATMs and, even when no one is present, to cover the keypad with one hand as the other hand enters the needed PIN.

If you want more ways to avoid identity theft, here are some good tips to follow.

Debit cards can be a smart way to ensure that you don’t live beyond your means. But they can also be dangerous in a world in which increasingly sophisticated debit card thieves are constantly finding new ways to access card information and steal money from users’ bank accounts, and even their identities. Debit card users need to protect themselves by understanding how debit cards work and how thieves obtain their personal information.