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People love their debit cards, but that could be a big mistake

  • Most Americans feel safer using a debit card over a credit card, according to new Compare Cards/Lending Tree survey.
  • The massive Equifax data breach has drawn renewed attention on identity theft and fraud.
  • Consumers should be familiar with the protections that their banks and financial institutions offer.

Credit or debit? The card you swipe at the register could make a big difference.

Here's why: Most credit cards offer $0 fraud liability, meaning you won't be out any money. Debit card users, on the other hand, may be liable for any lost money, depending on when the fraud was reported. In the worst case, consumers could be on the hook for the full amount of loss or theft, according to the Federal Trade Commission.

And that could be a problem for the younger generation: 69 percent of millennials believe that debit cards are as safe or safer than credit cards, according to a recent national survey of 1,000 adults conducted in August by Compare Cards/Lending Tree.

The rest of the population wasn't much better: Overall, 66 percent of Americans are more likely to trust debit cards than credit cards. The most trusted payment? Cash.

The massive Equifax breach has again focused attention on identity theft and fraud, which cost consumers more than $16 billion last year.

The good news is most banks and financial institutions will reimburse a victim of theft or fraud, according to Matt Schulz, senior analyst at CreditCards.com.

"A bad guy who gets a hold of a debit card can access real money from a real account." -Matt Schulz, senior analyst, CreditCards.com

The timing of a theft — like right before a bill payment is due — could create some serious financial damage. With so many Americans living paycheck to paycheck, that's a real possibility.

"A bad guy who gets a hold of a debit card can access real money from a real account," Schulz said. "If you're missing $500 for two days, it can cause some real hardships if you have bills due at that time."

Millennials' preference for debit over credit could stem from a fear of taking on more debt. As millennials build their financial lives and pay down or retire outstanding student debt, they'll likely embrace credit more, Schulz said.

"Part of people trusting cash is that there's no technology involved and it's a little simpler. People also need to realize that if you lose cash, it's gone, unlike with a credit card or a debit card," Schulz said. "It's an imperfect thing."

WATCH: 3 reasons you might not want Equifax credit monitoring