Explain the difference between a debit and a credit card and discuss the potential liability for a lost or stolen card

Answer 1

A credit card evidences an open-end credit account in which the customer may charge purchases up to a specified dollar limit and typically has the option of paying the balance in full each month or making only the required minimum payment. Under the TILA, a credit card customer is liable only for the first $50 in charges a thief makes before the customer notifies the credit card issuer. If the customer notifies the issuer before any charges are made, the customer has no liability. If a thief steals only the credit card number but not the card itself, the customer is not liable for any unauthorized charges. A debit card looks and feels like a credit card, but has different legal consequences. Debit cards work like checks and are sometimes called check cards. When you use a debit card, the bank deducts money directly from your account. If you report a lost debit card before anyone uses it, you are not liable for any unauthorized withdrawals. If you report the theft within two days of discovering it, the bank will cover losses over $50 . If you wait until after two days, your bank will only replace stolen funds over $500 . After 60 days of receipt of your bank statement, you bear any losses.