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Debit Cards-I thought they were as safe as Credit Cards:
Guest Post by FDL Trying to improve my financial situation is a developing story. There are some good things, related to the use of plastic, that are natural for me. Such as:
- Paying off my balance every month.
- Knowing I must pay, soon, for purchases, keeps me relatively honest with expenditures.
- Categorizing credit card expenditures into my Quicken account every month. This way, I can maintain my budget.
- I examine every credit card statement for those pesky ‘hidden fees’ or fraudulent postings to my account.
Recently, as a major holiday shopping weekend loomed, I read someplace that with the increased volume of these big shopping events, the danger of theft identity rose dramatically. This was the reason given for encouraging the use of credit cards over debit cards. If the explanation for this was given, I don’t remember. But the ides that using a debit card might not be as safe as a credit card has been poking around in my consumer brain. I finally decided to make myself do the research and find out if there was any truth to this concept.
Debit Card Safety: WOW! KABLAM!
That’s right, there is something there. Get a load of this:
- The loss limit on debit cards, like credit cards, is limited to $50. The catch here is that this limit only applies if you notify the bank within 2 days of the fraudulent transaction.
- A fraudulent debit transaction comes out of your account in real time. Poof! Even after you notify the bank, it can take a couple of weeks to unfreeze your money. That can result in a lot of overdraft fees or a lack of funds to pay bills, or both.
- If you use your credit card for an online purchase and return the item, your account will be credited, etc. If you return an item for which you paid with a debit card, when you discover the item is not for you, you often have to fight to get your money back. It is cash in the sellers hands.
- If you use a debit card at a hotel, for a rental car, etc, where the total amount needed is not yet known, the proprietor (Ritz, Hertz, etc,) adds a percentage to the predicted amount, just ‘in case”. This is the same as putting a hold on your bank account. In the end, the amount debited to your account will only be for the actual amount of use, but in the mean time, the extra funds are held in your account and can lead to overdraft fees.
- Speaking of overdraft fees, that $4 hamburger can lead to a $35 overdraft fee. The bank will let your account accept debits that cause an overdraft. Credit card companies just embarass you at the Walmart check out counter.
- Anyone who can get your debit card info-and thieves are very clever- can wipe out your checking account before you have any suspicion of trouble.
See what I mean? Wow. This info is from an article at moneywatch.com. For ways to safely use your debit card, go to this site. There is hope for the debit card, but it is a far cry from what I was thinking. We’ll talk again soon, FDL FDL is a frequent guest writer who Organizes People FAST at her blog: The Fast Declutter Your Home Blog!
READER QUESTIONS:
Do you use a Debit Card? Have you had any issues with overdrafts, frozen money, or are these concerns much ado about nothing? What say you?
Tags: debit card vs credit cards, debit vs credit card, how liable are you for debit card charges, using a debit card safely
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I used to always use my bank card as debit, but since I’ve learned of info like this, I always choose credit. That way you can still avoid a credit card, but have all of the protection (if you have a Visa or MC bank card).