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Location: 23.7 million to 162 million miles North of Venus
23,850 posts, read 12,682,742 times
Reputation: 10561
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But as more people began to use debit cards, the banks started to view overdraft fees as a major profit center and started to automatically enroll debit card holders into an overdraft program. Some banks instituted a tiered penalty system, charging customers steadily higher fees as the overdrafts mount.
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One college student whose bank records were analyzed by the center made seven small purchases including coffee and school supplies that totaled $16.55 and was hit with overdraft fees that totaled $245.
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Credit card companies, for example, were rightly criticized when some drove up interest rates to 30 percent or more. According to a 2008 study by the F.D.I.C., overdraft fees for debit cards can carry an annualized interest rate that exceeds 3,500 percent.
I realize that there are many people who prefer to use debit cards over credit cards. Because of that I've made a few posts during my time on this site to point out some of the pitfalls of debit cards, not to try to dissuade people from using debit cards, for the most part, but to help inform them of the pitfalls and how to protect themselves when/if using a debit card.
I believe I had previously posted about debit cards and overdraft protection in a thread created by someone else. If I remember correctly I had mentioned that if a person decides to use a debit card that it may be wise to create a separate bank account for debit card use only, to not keep a large amount in that account, to not allow auto transfers from other accounts into the debit card account and to not allow the bank to place overdraft protection on the debit card account.
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bleh, I meant to put this in the Personal Finance section instead of this section.
I realize that there are many people who prefer to use debit cards over credit cards. Because of that I've made a few posts during my time on this site to point out some of the pitfalls of debit cards, not to try to dissuade people from using debit cards, for the most part, but to help inform them of the pitfalls and how to protect themselves when/if using a debit card.
I believe I had previously posted about debit cards and overdraft protection in a thread created by someone else. If I remember correctly I had mentioned that if a person decides to use a debit card that it may be wise to create a separate bank account for debit card use only, to not keep a large amount in that account, to not allow auto transfers from other accounts into the debit card account and to not allow the bank to place overdraft protection on the debit card account.
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bleh, I meant to put this in the Personal Finance section instead of this section.
I have a more succinct philosophy: if you can't muster the discipline and/or math skills to master the simple mechanics of balancing a checkbook, don't use a debit card.
If you're overdrafting your account then you need to take a financial management course. There is no reason to overdraft an account unless you are just downright stupid. Tracking your expenses is your personal responsibility.
Using a debit card is bad in the first place because you don't want to expose your checking account to fraud using a CC# (almost all debit cards these days also function as a VISA/MC), the protections aren't there. If a theif pulls out all the funds out of your account you are going to be in a lot of trouble. Secondly, no debit card I know offers any rewards program so why in the world would you use them?
Debit cards were designed for idiots with no sense, people who cannot do the simple math of reconciling credit card statements and paying that balance in full.
Location: 23.7 million to 162 million miles North of Venus
23,850 posts, read 12,682,742 times
Reputation: 10561
Quote:
Originally Posted by Bob from down south
I have a more succinct philosophy: if you can't muster the discipline and/or math skills to master the simple mechanics of balancing a checkbook, don't use a debit card.
Yes, that's stating the obvious.
There are some who do have problems in overspending, hence one of their reasons for using debit instead of credit. They think that if they should hit their limit then the bank will reject the card. Not so if there is overdraft protection on the account.
Moreimportantly, not all overdraft fees that occur from debit cards come from the card holder overspending but rather from some form of debit card theft.
Many people are surpised that there is OD protection on their debit card accounts, since many banks have a habit of placing ODP on accounts without informing the account holder that it is being added, or has been added.
Debit cards were designed for idiots with no sense, people who cannot do the simple math of reconciling credit card statements and paying that balance in full.
Wow! That's quite an accusation against those of us who use debit cards. Believe it or not, some of us are quite savvy with money. Using a credit card is no guarantee of financial acumen.
If you use your debit as a credit card the credit card protections are in place and the money is still deducted from your account right away. Don't enter a PIN and it is being used as a credit card.
Location: 23.7 million to 162 million miles North of Venus
23,850 posts, read 12,682,742 times
Reputation: 10561
Quote:
Originally Posted by TuborgP
If you use your debit as a credit card the credit card protections are in place and the money is still deducted from your account right away. Don't enter a PIN and it is being used as a credit card.
It doesn't matter how the debit card is used, it is not a credit card regardless of the logo on the card, and it will not have the same protections that a true credit card has.
IMO you should use credit cards instead of debit cards. CC generally provides better fraud protection, better rewards, and free short term interest if you pay your balance on time. Yes banks have started offering fraud protection and rewards but I've never seen any that were close to as good as a good rewards CC. Just have auto transfer set up between your checking account and your credit card if you don't pay the bill. At least then if you overdraft you only pay one fee instead of one for each purchase. I don't really see any reason why any financially responsible person would choose a debit card over a credit card.
I don't think overdraft fees should be that high ... but if you cannot keep your checking account above $0 , then you deserve whatever comes your way. Here is a suggestion. I am an avid debit card user. The way I keep up is to keep every receipt, write each one down in my records book, and then match up my records book with my online bank account three times a week.
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, then you deserve whatever comes your way. Here is a suggestion. I am an avid debit card user. The way I keep up is to keep every receipt, write each one down in my records book, and then match up my records book with my online bank account three times a week.
