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Debit Cards Surpass Credit Cards

Debit Cards Surpass Credit Cards

                Early this year, debit cards passed credit cards in dollar volume spent, Debit card use was growing fast before the recession and their growth continued through the economic downturn.   

            Why has the use of debt cards increased?   Debit card users often have more than one reason for debit cards becoming their payment of choice.  Debit cards are safer to carry and use than cash.  For other consumers, using their debit is a response to the higher interest rates credit card companies are charging.  Some credit card users have also seen their credit limits reduced. Another advantage is that debit cards have a built in spending-control mechanism as you only spend what is in your account.

            There are still some potential problems though with debit cards.  Some of the possible difficulties and ways to avoid them follow.

            Overdraft Charges. Many banks will offer you protection, but beware of huge fees every time you exceed your balance.  Some banks will offer the option of alerting you by text or email you when your account is low

            Limited Protection for Problem Merchandise. The law protects credit card users from liability if a product is damaged or if you don't get what you ordered but debit cards do not have the same type of protection.  Check if your financial institution has a protection policy you can add to your debit card –usually for a fee – or whenever you buy online or make a large purchase, revert to using a credit card.

                Limited Protection for Stolen Cards.    Some of the major debit card companies promise that that their customers have zero liability if their accounts are misused. But those promises do not apply in all cases. For instance, one company does not cover transactions that involve the use of PIN numbers, and another will not cover any ATM withdrawals, or transactions not processed by its own network.  For safety’s sake do not let your card out of your sight.

            Holds or Stays on Your Account. If you use your debit card to buy gas, for example, the machine doesn't know how much gas you are going to buy. As a result, the machine will check to see if you have at least $50 or $100 available in your account. If the answer is yes, the retailer "blocks off" that $50 or $100. You might only by $10 worth of gas. Nevertheless, the $100 may be blocked off for several days and so unavailable for your use.  Keep extra cash in your checking account if you are using your debit card to make purchases. Give yourself a cushion.

            Write it Down, Write it Down   Failing to record a debit card purchase in your checkbook ledger can quickly lead to overdraft charges. Periodically check your account balance and transactions, either online, by telephone, or by printing interim statements at the ATM.

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