Debit Cards' Hidden Traps

Among Them: Fees You Don't Expect, And Weaker Fraud Protection Than Credit Cards Have

(CBS)  Debit card use has been booming, and no wonder: Consumers like using them instead of cash, and they don't carry interest charges, while credit cards do. Also, banks have been heavily promoting debit cards' perks.

But on The Early Show Thursday, Greg Daugherty, executive editor of Consumer Reports Money Adviser, alerted viewers to hidden pitfalls associated with using debit cards.

For starters, debit cards make it easy to overdraw your checking account, and banks often hit consumers with fees, frequently in the $30 range, every time they buy something with nothing left in their account to pay for the purchase. That can happen many times in a row if you don't realize your account's overdrawn, and those fees can really add up.

In addition, debit cards simply don't carry the same fraud protection credit cards do. Potential liability limits are higher, potentially exponentially higher, than with credit cards.

For complete details on what to watch for when using debit cards, click here.

[hypnotoad72]

Meanwhile, there''s that recent article that says Americans are spending more on credit cards.

Maybe the weaker protections on Debit cards may be a reason why?

[michellem99-2009]

I use a debit card and I know What is in the bank that is for my use. I have never gone over. The bank fees are taken out by that they are recorded and that''s the bank''s money. Then the rest go to live on. So you have to keep yer record as to what yer bought. If there be money be added to the card then yer put in bank fees if they take let say 10.00 for fees than put 20 or more to cover yer asre.Yer don''t spend what yer don''t have in yer acct. I never go below 3 dollars that is left in there ,the money set aside for the bank is not mine. Yer get a recept from every place yer use yer card and yer bal yer check book. If going from store to store know what cash yer have in yer acct. On debit card yer can take cash out of yer acct if ye have it. Be mindful to keep a proper record. Yer keep in mind the checks yer wrote that is not yer money. I am talking about what is left afther bank fees,checks writ,yer bal .I know what is there in my acct.

[tressy99]

CBS should have checked these facts before airing this segment. Visa and MasterCard provide the same zero liability on signature "credit" purchases, whether you use a credit or debit card. If you dispute a "credit" transaction, the bank has to credit your account within 5 days. Banks make fee income on these transactions because they take 95% of chargeback losses.
In reference to $75 or $100 hold at a gas station, the merchant determines the amount of this hold, not the bank. If you choose credit, the hold should revert to the amount of your purchase as soon as you complete the transaction.
Holds can be huge for hotel/motel, rental car (T&E-travel and entertainment) so you should use a CREDIT CARD for these unless you have LOTS of money in checking.
Many banks offer "bounce protection" which can cause excessive fees if you don''t watch your balance (only 11% of us balance our checkbook). Regulations require that you can opt out of these programs, but would you rather pay the bank $25 and let them cover your check to WalMart, or pay the bank for NSF, have them return your check, and pay WalMart another $30-$50? Banks provide this service to save you from the vultures at those payday loan places!
We hear about compromised debit/credit cards but do you realize how easy it is to forge or alter a check? Plastic is MUCH safer and will become more so. You''re losing the "float" anyway as more businesses convert checks to electronic debits.

[webworm99]

If you use a debit card, do not write checks or get a separate account for check writing or write one or two checks. Visa & MasterCard do have zero liability policy for their debit cards. According to my bank it a separate dispute form that you fill out. If you want zero liability sign for it. Do not use your debit card at pay at the pump unless you have plenty of money in your account. If you keep an eye on your account daily, you should have no problems. For those who are worried about fraud you can have daily authorization limit lowered but don''t lower it too much or you may not be able to use it on the weekend''s or holiday''s.

To the other poster, What the gas station did with a pin purchase is actually against the atm and banking rules according to my bank they may authorize $100.00. As soon as the pumping is complete they have to release that hold immediately. My advice is to dispute it with your bank if it is not to late. If the bank told you wrong. You need to file a complaint with your state banking commission.

[tkiller43]

Dear CBS,

On the Early show today your credit card guru gave advice that you should always use your pin numbers with your debit card. That can cost you some inconvenience and money. When you use your card (with a pin purchase) at some locations they put a $75.00 hold on your account for each transaction for up to 24 hours, especially at gas stations. This could result with an embarrassing purchase turndown or an over limit fee. Plus many cards that issue points for purchases will not issue points for with a pin generate purchase.

D Craig
West Palm Beach, Florida