1) Which is more dangerous to carry around in your wallet: a credit card or a checkbook?

While credit card numbers are pretty easy to steal and abuse, there is a well-known federal law that limits your liability to $50. What's more, as a result of footing most of the bill for fraud, credit card companies are pretty aggressive about tracking your purchases and flagging any thing that seems unusual before problems get too far out of hand. They keep an eye on you and they have simple, well established procedures for resolving problems.

Losses from stolen checks, on the other hand, are not so easily resolved. Banks offer too many different financial services to put energy into tracking your each and every purchase as you make it. The big companies which do offer risk management through aggressive tracking of bad checks do it for retailers and are more likely to blacklist you for having a problem than to call you up and politely inquire if someone is defrauding you. Consequently, cleaning up the mess of bad checks can be quite time consuming and frustrating.

What's more, there is currently NO federal legislation to limit your liability for forged checks. Each state has its own law with its own slightly different set of rules. In practice, most banks won't stick you with the bill for a bad check but it may take more effort on your part to make sure this is the way it all pans out.

Back to all answers.