Linked to a bank account, debit cards are swipeable cards with a PIN. While debit cards are convenient, there are some drawbacks to using them.
Overdraft fees are the worst. Once you go over the zero balance, these hefty funds can really add up. For many banks, It does not matter if you go over by a few cents, the charge will still apply. If you buy three $5.00 items and go over on your account, you could quickly rack up about $100 in overdraft charges. Thus, if you are unsure about how much money is in your account, use the credit card option or cash instead. Also, make sure you are aware of your bank’s overdraft policies.
In my experience, debit cards don’t offer the best rewards. There may be some programs out there but often times you have to pay to reap the better rewards. On the other hand, credit card rewards accrue quickly. Thus, use your credit card when you know you can pay off the balance. In this way, you’ll earn rewards without having interest. With a debit card, you may get a reward, but it might take a longer time. Take a look at some of the best debit card rewards at a glance at bestcashcow.com.
Sometimes a fee will be charged for using a debit card. This doesn’t seem to happen to me much but it is still annoying to be charged for nothing. It’s almost like an extra tax. As indicated by Debit card fees sneak up on shoppers, a New York Public Interest Research Group survey concluded “89% of the banks surveyed tack on a point-of-sale fee of anywhere from 10 cents to $1.50 for PIN-based debit transactions.” The banks surveyed were in the New York area.
Minimum Purchase Rules
Some stores require a minimum purchase with a debit card. For instance, a few weeks ago, I wanted to buy some flowers. They cost $4.00. The man at the front said that the minimum purchase to use a debit card was $10.00. I didn’t have any cash and didn’t want to spend more money, so I left without anything.
Debit cards are not protected as well as credit cards. According to Read this before you swipe! Debit-card dangers,”your liability on many debit cards can be as high as $500.” With credit cards, you are generally responsible “for the first $50 of fraudulent charges.”
Spending too much
When people pay with cash, they tend to spend less. With a debit card, it’s simply swipe, swipe, swipe. At the end of the month, people are left wondering how they spent so much money. With cash, you can force yourself to have a budget. With debit cards, little purchases can add up quickly.
The next time you make a purchase, think before you swipe!
Sloan Barnett Read this before you swipe! Debit-card dangers today.msnbc.com
Bankrate.com Debit card fees sneak up on shoppers moneycentral.msn.com