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Fraud is a chief concern for users of debit cards

While Congress debates the appropriate level of swipe fees banks can assess retailers for debit card transactions, consumers should be more immediately concerned with the risks that can come with using such a card.

Chief among them is fraud -- somebody swiping your dough with a swipe of your card.

Visa and MasterCard have zero-liability policies to protect debit card holders who promptly report fraud, but under federal law you could lose up to $500 if you don't make a report within two business days of discovering the problem. Within two days, your maximum liability under the law is $50.

With a credit card, your legal liability for unauthorized use is capped at $50 -- but again, prompt reporting is key because there is case law where consumers can be on the hook for more. "Consumers are not liable for unauthorized transactions so long as they report lost or stolen cards and unauthorized transactions promptly," said Nessa Feddis, vice president and senior counsel for the American Bankers Association.

Even so, fraudulent use of a debit card can mean money coming directly out of your checking account.

Check your statements closely for unfamiliar transactions. You may not know until the statement comes that someone got your card or number. You are legally liable for unauthorized transfers or purchases on your debit card if you do not report them within 60 days of receiving the statement that lists them.

The use of debit cards has exploded from a tiny portion of plastic purchases 15 years ago to about half of all noncash transactions now. Last year, more than 36 billion purchases were made with debit cards and prepaid cards, according to the Nilson Report.

Retailers like the ease of debit card transactions but hate the fees they are charged. They have pushed for cuts and even taken the plastic card industry to federal court.

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