Debit cards, Pros and cons

[disneysteve]

Originally Posted by safari

Someone can steal your card without stealing it physically.

Absolutely. Earlier this year, I had a fraudulent charge show up on a Visa card bill from a card I never use and don't carry with me. The card was still safely in my house. I have no idea how they got the number.

[lgslgs]

Originally Posted by safari

Someone can steal your card without stealing it physically. There are many ways that can be done. For example, when you give your card to a server at a restaurant, he/she takes your card and double swipes it, then uses the information from the magnetic strip to make a new card with your information on it.

See, that would involve the card actually leaving my hand.

We don't go out to restaurants and don't shop in any place where we'd have to hand a card to anyone.

If someone wanted to get my card they'd have to physically pull it out of my hand while I'm at the checkout, or take my wallet out of my front pants pocket without me noticing, or take it from where it is locked up in the house while we are home - dodging big dogs to do so.

I'd certainly be more concerned about theft if we led a lifestyle that involved handing off a card to someone else and then having to hope that they were honest.


It isn't the fact that it's a debit card that makes it risky for a lot of people, it is whether their handling of money is exposed to risk. Folks who's lifestyles involve handing a card to strangers, who don't feel that plastic money is the same as real money, or whatever might find that the extra protections of a credit card give them some insurance against misuse.

For us, though, our biggest risks are that we wear out the stripe on the card (so we have a back-up credit card available), or maybe that we both get in a car wreck and a renegade ambulance tech takes the card out of a pocket un-noticed. Not really a very high risk environment. Cash money is even a much bigger risk for us because of the chance that it turns to dust before we get around to spending it.

Lynda

[Coleroo]

Originally Posted by disneysteve

Absolutely. Earlier this year, I had a fraudulent charge show up on a Visa card bill from a card I never use and don't carry with me. The card was still safely in my house. I have no idea how they got the number.

It could have been from anything - from an employee at the bank, to a hacker breaking into the CC banking system, to someone finding a piece of paper with the number written on it! It terrible. And people sell those numbers on the black market.

AND, the sad thing, most businesses really do NOT care if the right owner is using the card or not - they just care about getting their money. I work in a state mandated deaf relay call center... one service we provide deaf users is internet (IP) relay calling. Unfortunately the internetional "nigerian / 401" scammers know our rules and use our system to place scam calls to businesses. We have been fighting the FCC for years to get a better stop in place for scams, but the scammers are always one step ahead. I have seen calls in which a scammer will go through 10-20 different credit card numbers before one is validated by the company (meaning, "enough money available to make the purchase go through" usually costing thousands of dollars). The company will just keep running the numbers for them until one hits!! Its scary how easy it is for them to obtain (and use, and authorize the use of) a credit card number - we see it every day, thousands of times a day.

[scfr]

Originally Posted by disneysteve

I don't quite get this. If you can't be trusted to not overspend, a debit card can get you in trouble just as well as a credit card can.

I think this is a classic illustration of "whatever works for the individual" as being the right solution. For the person I mentioned, they are responsible about paying their fixed bills (like rent) on time, and they are sticklers about avoiding bank charges like overdrafts, but apparently the allure of "minimum payment only" was too much which is why they got rid of the CCs and just use a debit card.

Their choice isn't mine, but I can understand the point of forced discipline and doing what works for the individual. For example, I like pizza much more than is good for me, so my solution is to only buy frozen pizza a couple times a year. If it was there in the freezer, I know myself and know I'd eat it more. Of course, I could always pick up the phone and order in a pizza, but I just don't do that. So, for me a phone is okay to have around (even tho' it's a tool that can be used for getting pizza), but frozen pizza is dangerous. Sure if I were perfect, I could keep a freezer full of frozen pizza and never give in to temptation. But, alas, I am far from perfect.

[disneysteve]

Originally Posted by Coleroo

most businesses really do NOT care if the right owner is using the card or not - they just care about getting their money.

We ordered a pizza from Domino's last night. As usual, I charged the purchase (we get double reward points for dining). When the driver came, he said he had to make an imprint of my card, something they never did before. He said it was to cut down on usage of stolen card numbers.

Of course, all that really proved was that I physically had the card. It didn't prove that it wasn't stolen, but I guess often theives only have the card number and not the actual card.

[lgslgs]

Originally Posted by disneysteve

We ordered a pizza from Domino's last night. As usual, I charged the purchase (we get double reward points for dining). When the driver came, he said he had to make an imprint of my card, something they never did before. He said it was to cut down on usage of stolen card numbers.

Of course, all that really proved was that I physically had the card. It didn't prove that it wasn't stolen, but I guess often theives only have the card number and not the actual card.

Now that would make me nervous. When he imprints the code he can also read the security code number on the back. He has your name, address and phone number from the pizza order. He can read the expiration date of your credit card from the imprint or right off the card itself. He even knows whether your card is made out to Disney Steve, Disney Steven, Disney Stephan, or Disney Q. Steve.

Sort of makes me glad we live too far out in the sticks to send out for a pizza. That's putting a lot of trust in your fellow man - who's probably not paid very highly to boot. Hope you tipped well.


Lynda

[tabbycat31]

the big cons of debit cards are one fradulent transaction can wipe out your whole acct. That happened to me last Feb when someone charged a Plasma TV at some shop in Texas. I was getting paid, logged into my bank acct, and saw my paycheck was garnished to pay overdraft fees, and my checking and savings acct were wiped out. It took me several hours to clean that mess up with the bank.

I havent touched my debit card since except for ATM use. In fact I want to switch to an ATM only one.

[buzz]

Honestly, has no one on the planet thought of having an online account dedicated to debit card use. Get one that reimburses ATM fees and keep $75 in it.

That puts to rest about 98% of the hysterics I hear about debit cards.

Having said that, I prefer a credit card.

[disneysteve]

Originally Posted by buzz

Honestly, has no one on the planet thought of having an online account dedicated to debit card use. Get one that reimburses ATM fees and keep $75 in it.

Can you explain what you mean? How would that eliminate problems? Aren't debit cards from online banks subject to the same problems, theft, etc? Also, what good is an account that only has $75 in it?

As I've said, I don't use debit so I don't really care but I'm always curious to hear other opinions.

[Ima saver]

Tabbycat, that is terrible. That is what I heard can happen and often does.

[tabbycat31]

that was the last time I ever used my debit card (and the one I had was newly issued since my last one expired). Now I only use it at the bank's ATM and put everything on a credit card instead. I have a $4100 limit CC and charge maybe $500 a month. A purchase that size, I could have easily disputed with the CC without affecting my checking and savings acct (I keep a small savings acct linked to checking)

[LivingAlmostLarge]

Originally Posted by PrincessPerky

steve...on avoiding debt with a card...you don't see it as having 1k to spend, you see it as having 1k, 900 of which is for the mortgage, 100 for groceries....

Yeah some people think of it wrong, and others use it, just like with CCs, you don't see your CC as unlimited spending, and others don't see the debit as 1k free cash.

On the other hand if Joe Schmoe needs a cash only plan and we try to talk him into a debit card, he just might end up in debt trying to pay bills.

Then again Jane Shane might use debit now, try to switch to cash and find that she has more cash than she needs and no banked money for the bills. (or none for the car repair that just appeared....)

You gotta find a plan that works for you to the best of your 'bent' and then keep looking for ways to improve.

I'm really confused. I don't use debit, never have and never will. Too much time and effort.

But seriously I always thought people who used debit were asking for trouble having to constantly juggle their checkbooks. They never know if they have enough in there, and thus why there were so many overdrawn fees, bounced checks, etc.

I get using a cash only system, like real cash, but I just don't get debit cards. At that point you're just using a CC, in facta debit card can be used like a CC.

[disneysteve]

Originally Posted by LivingAlmostLarge

But seriously I always thought people who used debit were asking for trouble having to constantly juggle their checkbooks. They never know if they have enough in there, and thus why there were so many overdrawn fees, bounced checks, etc.

I was going to post the same thing. It seems to me that someone depending on a debit card needs to have a much higher level of financial control than someone using credit. The debit card user needs to keep their account balanced to the penny at all times and at every moment needs to know exactly how much is in the account, what payments are outstanding and what bills are due when to know how much is available for current spending. It also means, most likely, that you need to maintain a higher balance in that account. Since most checking accounts don't earn interest, or earn very little, that isn't a great idea either.

Am I missing something here?

[Coleroo]

Originally Posted by LivingAlmostLarge

But seriously I always thought people who used debit were asking for trouble having to constantly juggle their checkbooks. They never know if they have enough in there, and thus why there were so many overdrawn fees, bounced checks, etc.
.

We use a cash only system (works best for my husband) but I prefer doing everything electronically - and using debit.

I think you just have to be good with remembering numbers. I've always known how much (almost to the penny) I have in my bank account, and I only keep enough in there to cover whatever bill Im paying and a little spending money. If I have say, $354 in there, I know it - and I know that if a payment is coming up of 250$ then I have $104 to spare. If I have $104 to spare, and I spend 94$ on groceries, I have 10$ left. Period. It just takes a little memory. I never even used a check book balance. I just remembered what was coming through. in the 8 years since i've been using debit, I've only been OTL once - and that wasn't due to debit use.

Some people though can't handle it... like my husband. I had to leave work one time to try to beat a withdrawal fee to the bank when my hubby got his first checking account --- because he had withdrawn. I called him and was like, HONEY.. if you have only 10$ in the bank, how can you make two purchases for 6.34 each??? He said it was because he didnt know what the remaining balance was because the receipt didnt tell him. *sigh* *double sigh*.

[scfr]

Coleroo - Thank you for that explanation! Now I think I understand why the person I mentioned uses a debit card so successfully ... She has this absolutely perfect photographic memory! I had assumed she was tracking every purchase carefully (which was a bit surprising), but now I
see that she must just be tracking the balance in that annoyingly-perfect memory of hers. Wow.

Well, this confirms that for me with my far-from-perfect memory, I should continue to stay away from debit cards.

[QueenOphelia]

Originally Posted by lgslgs

I use our debit card for most purchases. We rarely use cash - in fact the last cash we took out was $40 on July 5, 2006 and we still have most of that left. No transaction fee for that because it was done at the grocery checkout.

Wow! How do you pay for things at places that don't take debit cards or only take credit cards with a minimum of $10?

I would feel odd (and the owner would sneer at me) paying for a soda and newspaper at the deli/newstand with a debit card.

I go to alot of street fairs, antique shows, funky bars, etc. where cash is the best way to get a good deal or the only way you CAN pay.

Maybe it works for certain lifestyles where you only go to chain stores and don't do alot of small, everyday purchases where the owners like cash

[disneysteve]

Originally Posted by QueenOphelia

Wow! How do you pay for things at places that don't take debit cards or only take credit cards with a minimum of $10?

I would feel odd (and the owner would sneer at me) paying for a soda and newspaper at the deli/newstand with a debit card.

I go to alot of street fairs, antique shows, funky bars, etc. where cash is the best way to get a good deal or the only way you CAN pay.

Good points. It is against CC rules to impose a minimum charge, so you can argue that point.

You're right about sometimes needing cash, though. We like to shop at thrift shops, yard sales and flea markets. Cash is the only accepted form of payment at most of those.

[lgslgs]

Originally Posted by disneysteve

I was going to post the same thing. It seems to me that someone depending on a debit card needs to have a much higher level of financial control than someone using credit. The debit card user needs to keep their account balanced to the penny at all times and at every moment needs to know exactly how much is in the account, what payments are outstanding and what bills are due when to know how much is available for current spending. It also means, most likely, that you need to maintain a higher balance in that account. Since most checking accounts don't earn interest, or earn very little, that isn't a great idea either.

Am I missing something here?

I think you are sort of missing that using debit cards isn't really that complicated or that big of a deal.

Keeping aware of how much money is available when using a debit card isn't a whole lot different than being on the cash system and choosing to stay aware of how many $$ are in your wallet. How often do cash users get surprised at the checkout or when the restaurant and find out that they don't have enough to pay the bill? (Correct answer - responsible ones don't, and ones who are lax with their money have it happen a lot.)

Debit cards are lousy for folks who have problems with spending more money than they have, or for folks that just can't be bothered to do something no more difficult than recording their spending in a check book used to be. But credit cards are just as lousy for those same people - the only difference is that abusing a debit card gets you immediate service fees and abusing a credit card gets you debt. And overspending the cash in your wallet used to mean that you'd be arrested or at least be doing the restaurant dishes until you paid back your debt. Bad money handling brings bad results no matter whether it's through using debit, credit or cash.

It usually isn't the financial instrument that causes problems for people. It is their behaviors. I just personally feel that financial instruments that come with all sorts of added protections and provisions for lending you extra money if you mess up aren't the great deal that they are promoted to be.

In fact, now that I think about it I'd probably agree with Ima that cash is best if the nearest branch of my bank wasn't over 200 miles away. But with no bank nearby, my debit card gets treated as a big pile of cash exactly equal to my bank balance (and NOT linked to any other accounts through overdraft "protection".) Sure, I've got to pay attention to what I'm doing with it and make certain choices to decrease theft risk but that applies to cash, credit, gift cards, vouchers or whatever.

Lynda

[poundwise]

I don't understand the problem with keeping track with debit card (or credit card) use.

In my experience, whenever you use one for a purchase, they give you a slip of paper (a receipt) that you can stick in your wallet or purse. You don't have to "remember" all your transactions