What the banks won't tell you about debit cards. Chapter 1
Many of you have a checking account and perhaps a debit card with a Visa or MasterCard logo. Some of you may even have a Discover debit card. But no matter what debit card you have, you may not want to use it after I reveal what the banks won't tell you.
If there's unauthorized use on your debit card, you're the one who will have the biggest headache because YOUR cash has been taken out of your account.
Bank of America had a great TV ad where some guy discovered someone used his debit card and took funds out of his account. He thought his weekend would be ruined. He discovered the problem on a Thursday morning. True to BofA's service standards, funds were restored the next business day - on Friday. What if you discovered this on a Friday evening. Funds would be restored on the next business day - Monday. Your weekend is screwed.
Solutions:
1) Use a credit card for purchases. If someone uses your credit card without your authorization, it's the bank's credit line that got hit first, not your cash. You've got a buffer between the loss and your statement to report the problem.
In 2006, some unauthorized charges totaling over $5,000 posted to my credit card. Can you imagine if this hit my checking account? Just think of all the bounced checks that could be generated.
2) Use an ATM card (no Visa/MasterCard logo) that requires you to enter a PIN to make a purchase. This is still no absolute guarantee, but if your ATM card, chances are that no one could use it since they would need your 4 digit-PIN to make a purchase. This is referred to as a POS (Point of Sales) transaction. This is NOT the same as a signature-based transaction which is usually free by itself.
Watchout! Some fee-greedy banks like Fifth Third Bank will charge you $0.25 to $2 to do a POS transaction. (See fees at bottom of the linked page). Of course Fifth Third will tell you that it's always free to use a debit card at any store. That is when you select "Credit" and sign for your purchase.
Next chapter:
The only two occasions when you should use a debit card.
Labels: banking advice, Debit card tips
posted by askmrlee @ 11:26 PM
0 comments
