Danger Alert: Using Debit Cards at Gas Stations

As I was driving down the U.S. East Coast from Northern Virginia to the Florida Keys three weeks ago, I stopped at several gas stations to fill up my tank, and a note I saw stuck to every pump at one gas station in North Carolina especially struck me. I’ve seen some gas stations display one set of prices on the pricing board, but charging higher prices for card payment at the pump, encouraging you to pay by cash (so they could avoid their credit card processing fees), but this one was different… I took a photo of it (see below) to post about this in my blog.

Debit card use at gas pumps is dangerous

The moment I saw this, I immediately remembered an article I read in January of this year, which talked about the most dangerous places to use your debit card. Gas stations were first on that list! Why? Here’s a direct quote from that article:

Be especially vigilant at gas stations, Litan says. “Gas pumps are notorious for skimming because they’re produced by only a couple of different manufacturers, and if someone gets the key to one from a disgruntled employee, they can insert a skimming device inside the pump where it can’t be seen,” she says. She recommends using a credit card rather than a debit card when you fill your tank.

If you must use a debit card at the gas pump, choose the screen prompt that identifies it as a credit card so that you do not have to type in your PIN. The purchase amount will still be deducted from your bank account, but it will be processed through a credit-card network, which will give you greater protection from liability if fraud does occur.

I find it interesting (to put it mildly) that a gas station would encourage consumers to make themselves vulnerable to fraud. Yes, $0.06 in savings per gallon would’ve saved me over a dollar on a tank of gas. But was the risk really worth it?

8 thoughts on “Danger Alert: Using Debit Cards at Gas Stations”

  1. There’s another danger – more of an inconvenience really, but still – of using any kind of card at a gas pump. Very often, the station will pre-authorize your card. On the drive from Albuquerque to Houston in the moving truck, I got a call shortly after I used my credit card to fill the tank. $5,000 had been charged to my account! My first thought was “stolen card” of course, but it was a round number – exactly $5,000. The credit card company suggested I wait a day or two to see if maybe it wasn’t just a pre-authorization, and if that charge wasn’t replaced by the proper amount, they’d dispute it.

    Turns out it was a pre-authorization amount. It was supposed to be a pre-authorization for $50.00. They left out the decimal point.

    I bring this up because rather than just a funny story, it’s a pretty serious danger when using a debit card. Hotels always warn you that a pre-authorization on a debit card can have severe effects due to lowering your balance above and beyond what you might be planning on spending. Gas pumps are the same way. If my bank account had been hit for $5,000, that could have been disastrous. Credit cards are usually more flexible.

  2. Geno, you’ve nailed it! It’s not worth saving a little bit of money at the gas pump when it could cost you the entire contents of your accounts.

    When I worked with an identity fraud protection company I learned that debit cards have quite a few problems that are protected against by federal law for credit cards. For example, if you don’t report loss of credit card numbers in the first 2 days (or even longer) on a Mastercard or Visa then the credit card company covers your loss. If you miss the initial 2-day window on the theft of debit card info, your liability goes from $50 to $500 and after 60 days you could lose the entire contents of your account! This article explains it in more detail as well as other pros and cons of credit cards vs. debit cards: http://www.cardratings.com/nov00new.html

    I decided then and there to keep my debit card in my wallet and use my credit cards instead.

  3. I was frauded at a gas station 2 years ago and they actually made another card and used it all over town. They got caught as they were bold enough to go to the bank atm and take out money so they had them on camera. I was out $2000 until the bank confirmed it was fraud.

    $.06 is not worth the aggravation that comes with your debit card number being taken.

  4. @Daniel: Wow… I’ve read about pre-authorizations of $50-100, but on my personal accounts have been hit by $1 ones instead. I think with the difference with credit cards is that they don’t pre-authorize, but charge the full amount too. So, credit cards are definitely a better way to go.

    @Sharon: Thanks for the link to an important article, and your comment, my friend.

    @Suzanne: What a terrible experience! Did you get all of our money back?

  5. Debit cards are nice but I like the insulation that a credit card provides. It protects me from the immediate impact of fraud plus I have a powerful advocate if/when there is fraud. The credit card company very much wants to eliminate fraud since their money is at stake — there is a win-win incentive to work on my behalf. I like that.

  6. The last 2 times my debit card number was stolen, it was the result of using it at a gas station. On my most recent trip from NY to FL and back, I used my American Express (after calling them, and telling them I’d be traveling, so the card wasn’t declined). Amex is great about security

  7. @Mike: Yes, I prefer credit cards on these reasons too. However, advocating my interests in some overseas cases is sometimes not something they care to much about. I still remember an Edinburgh (Scotland) apartment rental company getting $750+ of my money for a flat I never used (due to it not meeting the description they’ve provided). We moved to a hotel instead, returning the keys to them, but they still charged me, and Chase (the issuer of my MasterCard) didn’t help at all. Sad.

    @Eric: AmEx is my favorite too. Top notch service all the time.

    1. Ouch, that Edinburg flat payment hurt, Geno. I once had to eat a four digit loss due to rebate money not coming in after the company went bankrupt. Apparently promised rebates aren’t covered under credit card terms.

      I agree that AmEx seems to be the best overall for disputes. I have found them incredibly helpful and am glad to have them on my side. I think they easily earn their annual fee in most cases.

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