How To Avoid Getting Screwed When Using Your Debit Card

[Donnachaidh]

http://lifehacker.com/5734973/how-to-avoid-getting-screwed-when-using-a-debit-card

Debit cards come with more risk than most payment methods, but we tend to use them because they're convenient. While they can be handy, they can also cause you a lot of trouble. Here's how to stay safe.

In general, credit cards are safest. If you have a credit card or charge card (read an explanation of the difference here), you're better off using that for the majority—if not all—of your purchases. Credit and charge cards tend to come with better rewards and you don't have to worry about fees for exceeding your limit. They better protect your money because you aren't technically paying with your money until you've seen the charge, whereas your money is instantly removed when using a debit card. All of that said, there are many reasons why you might need or want to use a debit card. If you don't need to use your debit card, don't. If you have a good reason for using it, read on. We're going to talk a look at the rights you have and the risks you take as a debit card owner, as well as what you can do to stay safe and avoid fees from your bank and general fraud.

Know Your Changing Debit Card Rights
The Few Varying Rights You Have

You get very few rights, by default, when it comes to debit cards. Most of the "rights" you have come in the form of incentives from your bank. Banks will often offer fraud protection packages with their accounts and cards, so be sure to call your bank and find out what rights they're offering for your specific type of account. Generally these rights are pretty decent with major banks. What you need to be more concerned with are the ways they'll charge you fees for minor mistakes on your part. Overdraft feeds are now much more limited, cutting out a huge source of revenue for banks. Additionally, interchange rates are now being capped as of July 1st, 2011, meaning banks can only make so much money in merchant feeds every time you swipe your card. The more restrictions imposed on the banks means the more creative ways they need to find to start charging fees. While nothing is in place just yet, the Wall Street Journal points out that the following fees are likely to show up this year:

* An annual fee of about $25 for debit card use
* Higher withdrawal fees at ATM machines for non-customers
* Limitations on the number of transactions you can make with your debit card, and potentially the amount as well.


More at the link --

[Lucian]

1. Hmmm...I wonder if any of lifehacker's advertisers are credit card companies...

[Bonhomme Richard]

4. +1 n/t

[elleng]

6. Really. Buying on 'credit,' incurring debt better idea than paying directly, immediately?

Don't go for this at all.

[Lucian]

17. I have no problems with my debit card.

I make several transactions per day with it and everything is paid for. I don't have to worry about paying off a debt at the end of the month either, which is awesome.

[elleng]

18. Ditto

[pottersvilleusa]

31. Ditto

Also.
Never seen these issues.

[Statistical]

2. The largest advatnage of credit card (vs debit card) is that ...

any bogus charge, fraud, or mistake only affect your credit line (banks money) rather than taking real money out of your bank account.

If $2,000 in bogus charges showed up on my credit card it would be bad news but $2,000 in bogus charges reducing the balance of my checking account by $2,000 until fixed would be far worse.

I put everything on CC, collect points, and pay it in full at end of the month.

[proud2BlibKansan]

8. I've had that happen and my bank put all the money back in my account within hours

It really depends on where you bank.

[Statistical]

11. That is a good point.

The issue is more than the language in most debit card agreements is rather vague. A card holder likely won't know how long the delay is until it happens. If it works out great if it doesn't he/she doesn't have an recourse.

That being said use what works best for you. Some people SHOULDN'T use credit cards. The people who look at the credit limit as their "buying power" should be using a debit card. Personally I like the better rewards, simplicity of use (one card for everything), and better protection of a CC.

[MissB]

3. I don't see credit unions moving to add yearly fees to use a debit.

[CaliforniaPeggy]

5. That's my take also...

My debit card was issued by my credit union. I use it every chance I get, and I have never had a problem.

It's like electronic cash.

VERY convenient.

[superduperfarleft]

9. Actually, in my experience, many CUs used to charge fees for debit card usage.

They stopped eventually as the bigger banks moved away from those fees. I'm curious to see how CUs will respond to this change (which at this point is nothing more than speculation).

[Codeine]

7. I've been using my debit card for everything

- and I mean everything, from online purchases and bill paying to reserving hotel rooms and buying groceries - for probably fifteen or more years without a single problem. I don't get the constant nervousness about their use.

[proud2BlibKansan]

10. Same here

I had my account hacked once and my bank refunded every dime and didn't charge me any fees either. It was really fast also. I've heard people having to wait as long as 30 days to get their money refunded but I got mine back the same day.

A lot of us don't use credit cards.

[WillowTree]

15. I do, too, but I have the charge put through as a credit whenever possible.

My bank gives points for "non-pin" transactions which gets me a kickback of $100/year just for purchases I would have made anyway. And I don't have to concern myself with interest rates or late payment charges. And it's a MasterCard debit card, which makes its acceptance almost universal and my bank, not one of the big biggies, provides virtually the same protections as you'd get with a credit card, so there's little risk.

[walldude]

12. What a crock! Who are they kidding with this shit?

Yeah go ahead, pay credit card interest rates on everything you buy, it's much safer then spending money that you actually have... :eyes:

[Statistical]

13. Why would you pay interest if you have the money?

[Gormy Cuss]

14. Paying off the bill in full each month avoids that interest and if you hold your money in an

interest-bearing account you can actually GAIN money through interest paid during the month.

[dixiegrrrrl]

21. Using a credit card does not necessarily mean having to pay interest.

If you use it for purchases you plan to pay off at end of the month, there is no interest.

Credit cards can be a very useful tool, like any tool they can be mis-used.

[Quantess]

16. Oops I accidentally Recommended.

I meant to Unrec, sorry.

[whatchamacallit]

19. For most, credit card = crack pipe

Just say no.

[jp11]

20. I tried using my debit card to curtail and end my use of credit for stuff

I didn't need/could afford with cash now. Using a CC makes it easier to rack up debt unless you can get into a habit of paying off your charges the same week/following days or using your real bank balance/spending budget as your total 'limit'.

In general I'd agree a CC is better than a debit card depending on how you use it of course.

[upi402]

22. Credit card co. confication of our homes - Biden loved it!

Bankruptcy law...

Debit cards don't let them change the due date on you - causing late fees and higher interest rates.
Debit puts you account at risk, but I've never had an issue since I nixed my credit card usage years ago.

[Statistical]

23. Credit card companies can no longer change the due date as a result of Credit Card Reform bill.

The date must remain the same day of the month each month and if that date falls on a day when bank if closed (weekend or holiday) the bank must accept payment on the next business day as on time.

Banks must consider any payments accepted that day to be ontime (no payments after 11am considered received the next day).

[upi402]

25. I know. But it happened to me and I know they're plotting their next crime

... if they haven't already.
I don't think there's enough opposition to them from our party to put teeth into anything designed -on its face- to stop them from ripping us off.

[Statistical]

26. I don't see how much better debit cards are...

They are issued by the same company/entity/credit union/bank.

If you don't trust your bank's credit card you likely shouldn't trust their debit card either. While the method of ripoff may change the fact that you don't trust an underlying entity should be of more concern than the actual financial instrument.

For example I trust USAA thus I have no problems using USAA checking account, debit card, or credit card. I don't trust BofA thus I wouldn't trust their checking account & debit card anymore than I would a credit card from them.

[upi402]

28. They are not debt accruing instruments n/t

[Statistical]

29. I think you need to read up on some accounting.

Situation A
Entity has $1000 in cash.
Entity pays $1000 for purchase.
Net value: $0.00

Situaiton B
Entity has $1000 in cash ($1000 asset)
Entity puts $1000 on credit. ($1000 liability)
Net value: $0.00

[upi402]

30. If you pay from your account on a debit card -you haven't accrued debt

If you charge debt on your credit card -you HAVE accrued debt.

How's that wrong?

[hobbit709]

24. I use my debit card once a month at the gas pump

Outside of that I use it maybe once a year. Most everything else is cash. I have two more checks to write to the mortgage company and then it's paid.

[Odin2005]

27. Bullshit, pro-credit card propaganda.

[MadHound]

32. Or you could simply use cash. n/t

[defendandprotect]

33. I've all but stopped using my ATM card ... and thinking of cancelling it ---

but wondering if that might backfire somehow --

??