Your Liability for Unauthorized Credit and Debit Card Charges
Learn how to limit your liability for unauthorized credit or debitcard charges.
If you lose your ATM, debit, or credit card, don't panic. Federal laws and bank policies limit your liability for unauthorized charges, as long as you quickly notify the bank or card issuer of the loss or theft. Read below to learn about your notification duties and maximum liability for each type of card.
Credit Cards
As long as you notify the card issuer right away if your credit card is lost or stolen, you won't be out much money. Here are the rules:
- If you notify the card issuer within a reasonable time after you discover the loss or theft, usually 30 days, you're not responsible for any charges made after the notification.
- For charges made before the notification, you'll be liable for only $50 (and many credit card issuers waive even this small charge).
- If you don't notify the issuer within 30 days, however, you could be on the hook for all charges incurred before you make your notification.
ATM and Debit Cards
With ATM or debit cards, you must act quickly in order to avoid full liability for unauthorized charges when your card is lost or stolen. Under the federal Electronic Fund Transfer Act, your liability is:
- $0 if you report the loss or theft of the card immediately and the card has not been used
- up to $50 if you notify the bank within two business days after you realize the card is missing
- up to $500 if you fail to notify the bank within two business days after you realize the card is missing, but do notify the bank within 60 days after your bank statement is mailed to you listing the unauthorized withdrawals, or
- unlimited if you fail to notify the bank within 60 days after your bank statement is mailed to you listing the unauthorized withdrawals.
How to provide notice. Provide the notice in writing. For purposes of meeting the time requirements, the law considers written notice to have been given when you deposit it in the mail or deliver it personally to the bank. The timelines for giving notice are generally extended if your delay in giving notice was caused by extenuating circumstances such as extended travel or hospitalization.
The bank's duty. If the bank claims that you are liable for amounts over $50, it must show that the additional loss would not have occurred if you had given timely notice of the card's loss or theft.
Voluntary Caps on Liability
In response to consumer complaints about the possibility of unlimited liability, Visa and MasterCard now cap the liability on debit cards at $50. And some banks don't charge anything if unauthorized withdrawals appear on your statement. Also, some states have capped the liability for unauthorized withdrawals on an ATM or debit card at $50.
For more information on finances, debts, and how to regain financial health, read Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Robin Leonard and Margaret Reiter (Nolo).