Your debit card could come back to bite you
Posted
Jan 14 2008, 04:14 PM
by
Karen Datko
You've given up credit cards because you don't have the discipline to limit your spending. Is your debit card really a better alternative? Not necessarily, says Anita at Debt-Free Mom. Anita quotes from well-known debt slayer Mary Hunt of Money Rules, Debt Stinks, who wrote, "Even though your bank has the ability to stop you from swiping your debit card to pay for a $5 hamburger when you have only $4.94 in your account by declining the purchase -- they don't!" Hunt says that if you don't have real overdraft protection, you're going to pay fees.
Some bloggers also worry that they don't get the fraud and consumer protection from their debit card that comes with a credit card purchase. "They lack the same protections as credit cards, they allow access directly to your checking account, and many of them don't have cash back or any other benefits to speak of," writes Jim of our partner blog Blueprint for Financial Prosperity. "So, why do so many people use debit cards?" Eden at Finance and Fat says his Visa debit card offers the same fraud protection as a credit card. But, Hunt observes, that's not legally required. Some bloggers also note the problems associated with "blocking." For instance, your bank might put a $75 hold on your account for several days when you use your debit card to purchase gasoline.
Glblguy at Gather Little By Little, whose debit card was stolen last fall, says he now checks his balance online twice a day, and has set up a balance alert so his bank will send a message to his cell phone if the balance drops below a set limit. He also suggests you write "check ID" in the spot where you'd otherwise sign your card.
