Thursday, July 15, 2010

10 Places Not to Use Your Debit Card: Do You Do This?

Debit cards have become the currency of choice in America today. It enables users to conduct a wide variety of financial transactions without carrying lots of cash.

The problem is that debit card users begin using them like credit cards, and that‘s not always wise, financial experts warn. “It’s important that consumers understand the difference between a debit card and a credit card,” says John Breyault, director of the Fraud Center for the National Consumers League, a Washington, D.C.-based advocacy group. “There’s a difference in how the transactions are processed and the protections offered to consumers when they use them,” he told Yahoo Finance.

These are 10 places or situations where it is recommended you do not use debit cards, according to Yahoo Finance:

1. Online: Susan Tiffany, director of consumer periodicals for the Credit Union National Association says if you have problems with a purchase or the card number gets hijacked, a debit card is “vulnerable because it happens to be linked to an account.”

2. Big-ticket items: “With a debit card, you have fewer protections,” explains Linda Foley founder of the Identity Theft Resource Center. When buying electronics or renting a car, some credit cards provide insurance to cover the goods or services.

3. Deposit Required: “This is where you want to use a credit card instead of a debit,” says Peter Garuccio, spokesman for the national trade group American Bankers Association. It’s a win-win: they get their security deposit, and you still have your money in your checking account.

4. Restaurants: “Anecdotally, the cases that I’m hearing of credit or debit information being stolen, as often as not, [is] in a restaurant,” says Garuccio.

5. You’re a new customer: [First] get a feel for how the business is run, how you’re treated and the quality of the merchandise before you hand over a card that links to your checking account.

6. Buy now, take delivery later: You don’t have the dispute rights that you would with a credit card.

7. Recurring payments: How’s this for a debit horror story: the notorious case of the gym that continues to bill an ex-member’s credit card. Now, imagine that the charges aren’t going onto your credit card, but instead coming right out of your bank account immediately.

8. Future travel: If you’re buying travel through a debit card that you won’t use for six months or making a reservation for a few weeks from now, you’ll be out of the money immediately.

9. Gas stations and hotels: Yahoo Finance says sometimes gas stations and hotels place holds for deposits “in the hundreds [of dollars] to make sure you don’t run up a long distance bill, empty the mini bar or trash the room. The practice is almost unnoticeable if you’re using credit, but can be problematic if you’re using a debit card and have just enough in the account to cover what you need.”

10. Checkouts or ATMs that look shady
Today, criminals are more savvy with using skimmers — and planting them in places you’d never suspect, like on ATM machines on bank property.
–terry shropshire

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