All about debit cards
- October 29, 2009
- 1 comments
- Posted in Debit Cards
I love debit cards. They’re the electronic equivalent of writing checks or paying cash. When you pay by debit, the money is taken directly out of your bank account, right away. That makes them terrific tools for budgeting. You can’t kid yourself by saying “I’ll pay for it next month,” the way you can with credit cards. Instead, you have to decide whether you can afford to pay right now. That cuts down on impulse purchases fast.
Your debit card is your ATM card with a Visa or MasterCard logo attached. You can use it anywhere credit cards are accepted. At restaurants and most stores you simply sign for the purchase. At many grocery stores you also have the option of entering a PIN number. That lets you ask the check-out clerk for an extra $50 or so in cash. The money will be added to your purchase and debited from your bank account.
I have three tips to help you get more from your debit card:
1. Some cards offer reward points for airline miles or buying goods from catalogs. You get points automatically when you sign for purchases at a store. But it’s trickier when you have to enter a PIN number. In that case, the screen will ask you to tap either “debit” or “credit.” If you tap “debit”—the logical thing to do—you do not get rewards points! You have to tap “credit” so the transaction runs through the credit-card system. It will still be handled as a debit but you’ll get credit for your points.
2. Banks are milking customers who don’t keep track of their balances. They let you spend more than you have in your account (up to an extra $300 or so) and then charge a fat fee for “protecting” you. Typically, you’ll pay $20 or $30 for every overdraft, and maybe $5 fee every day the debt is outstanding. (Have I told you that I hate banks?) If you have a savings account, link it to your checking account so that any overdrafts will be paid from your own funds. If you don’t have savings, sign up for the bank’s overdraft line of credit. It costs less than letting the bank “protect” you one overdraft at a time. Best idea: Keep track of your bank balance and never spend more than you have.
3. Never use your debit card for online or 800-number transactions. If an item comes damaged or isn’t as nice as you expected, you need the retailer’s cooperation to get your money back. If the retailer balks, you’re stuck. By contrast, shoppers who use credit cards can refuse to pay, thanks to the card’s dispute resolution system.
There are two main downsides to debit cards:
1. Debit transactions don’t help you build a good credit history. For that, you need to use your credit card and pay on time.
2. There’s less protection from theft than credit cards offer. Visa and MasterCard won’t charge you more than $50 for unauthorized debit transactions but they cover only online or signature purchases. If a thief uses your PIN to withdraw money from your ATM account, it’s up to the bank to make you whole. Generally, it will—but in the meantime, checks will bounce.
Tags: debit card fees
People should not have or use debit cards!!! A purchase should not be made that cannot be paid for–as simple as that. The use of the credit card–if you go by Jane Bryant Quinn’s own advice dictates that the card be paid off in full every months. Therefore if the money is not there for the purchase the purchase should not be made. Debit cards do not provide the protection from warranty or theft–as you noted–but they also have no side benefit whatsoever (like points or cashback!) But if a person thinks of points or cashback as anything but–a lucky windfall they are fooling themselves. A purchases should never be made with an eye to the 1% windfall!!! Come on Ms.Quinn people do not need wishy-washy advice on finance. People should be told-never, never, ever acquire or use debit cards.