Laura Rowley Money & Happiness

Last week, my Yahoo! Finance column looked at the growth in high-interest checking accounts that require consumers to jump through certain hoops, including use of a debit card 10 or more times a month. But frequent debit transactions can increase the possibility of fraud, leaving consumers potentially on the hook for significant amounts of money.

Debit cards don't offer the same protection as credit cards. If your credit card is lost or stolen and someone goes on a shopping spree, you can dispute the charges and you've lost nothing. But if someone steals your debit card and pin, they can immediately extract the cash from your account. You may be out the money for days, or even weeks, while the issue is cleared up.

According to federal regulations, consumers who report debit card fraud within two business days of the loss or theft are only liable for fraudulent charges up to $50. But if 60 days go by from the date the statement listing those charges was mailed out, and you don't notify the bank or financial institution of the problem, you could be liable for any unauthorized transactions afterward. That may include money removed from savings accounts linked to your checking account, and even the full value of any lines of credit associated with the account. Here are a dozen tips to protect yourself:

1. Monitor the account balance daily -- and make sure your computer has up-to-date antivirus and anti-spyware software. "Get in the habit of checking your bank accounts as often as you do the social networking sites," says Greg McBride, senior financial analyst with Bankrate.com, "whether you're looking to make sure payments cleared so you're not overdrawing accounts or monitoring against theft or identity theft."

I look at all of my accounts as part of my morning routine. Another method is to set up account alerts. Have the bank notify you by email if a transaction above a certain amount happens, or your balance drops below certain amount.

2. Watch out for unsecure bank sites. Atul Prakash, a professor of computer science and engineering at the University of Michigan, conducted a 2006 study of the online banking operations of more than 200 institutions, and found 75 percent had at least one design flaw that could make customers vulnerable to cyber thieves.

For example, 55 percent of the sites Prakash studied put contact information and security advice on unsecure pages. When you log in to your bank, the URL should begin with "https" to indicate it's a secure channel -- not "http." "The problem is if I have an unsecure page that's not 'https,' then essentially it could be faked," he says. "It's very easy to make a look-alike site with all the logos, pictures and ads -- but it's not your bank." Another no-no: 28 percent of the sites allowed the use of social security numbers or email addresses for user IDs. This information is easy to guess or discover.

3. Make up fake answers to the personal security questions. Prakash suggests that you create nonsensical answers to login security questions; when it asks for the city where you were born, you could write "broccoli." (Just write down the info and store it securely.) "If you really put the place you were born, that's probably on your Facebook page," he says. "Go with the assumption that all personal information is known."

4. Never respond to an email from your bank asking you to provide security information; such emails are "phishing" scams -- the link provided goes to a fraudulent site set up to collect the information and raid your account. Bookmark your bank's Web site, and always log in from there.

5. Don't use your debit card while traveling, Prakash says, and don't log into your account through a hotel's router -- either wired or wirelessly. "There are ways in which your (connection) can be compromised," he says. "There is a very sophisticated attack which would let them take over your browser, and since they are on your machine at that point, even if you're on a secure channel, they can still peek into your account."

6. Don't put big-ticket purchases on a debit card. "There are a lot of purchases that are just much better suited to credit cards," says McBride. A credit card offers more protection if goods are damaged or defective, because you can refute the charges. I typically charge fixed-amount items of less than $50 to my debit card -- groceries or a small household purchase.

7. Beware of putting gasoline or restaurant bills on a debit. These merchants may freeze your card with a set amount to accommodate additional charges -- such as a big tip for the waitress. The gas station may require you to swipe the card before you fill the tank, so it blocks out a certain amount on your card to cover a full tank -- and then some. See this story for more details.

8. Be sure there is extra padding in your checking account if you debit frequently. "Even something as innocuous as a gasoline purchase could knock you for a loop if you're running the account balance low and a freeze is put on that card by the merchant until the transaction settles," says McBride. "The merchant may put a $75 freeze on the card and it takes two days before the transaction settles. It's really a $25 withdrawal but the frozen $50 could have triggered other overdrafts if you are running your balance really low."

9. Don't use your debit card on e-commerce sites. Use a credit card or Paypal account.

10. Beware of "skimming." This is a technique in which thieves set up equipment that captures the magnetic stripe and keypad information when you input your PIN at ATMs, gas pumps, restaurants or retailers. Consumer Reports, which investigated the scam, says gas stations are prime territory for skimming -- so hit "credit" and sign for the transaction instead of entering a pin. Also use an ATM at a bank instead of a convenience store, because bank ATMs tend to be better monitored.

11. Read the fine print. "Look at the policy the bank has in terms of fraudulent transactions," says Prakash. "Some banks clearly say that even if the account is compromised because someone steals the user ID and password, they will make you whole; others are a little more cagey. The wording is different across different banks."

12. Finally, Prakash advises consumers to designate one computer for online transactions (no casual Internet surfing allowed). "You need to create end-to-end trust and to do that you need a trusted machine and trusted pipe to your bank," he says. "The more things you can keep under control the better it is."