Would someone explain debit cards to me?

[Ima saver]

I have never had one or used a debit card. Are they more trouble than they are worth?

[HistoryChick]

The best way to describe it is that's its an electronic check. The only penalty I'm aware of is if you overdraw your account (similar to bouncing a check). As long as you don't go over what's in your checking account, you're fine.

Like credit cards, some debit cards offer rewards (Perkstreet's cash back comes to mind), but AFAIK, not most.

The only other caution is that if you lose your debit card, you don't have the same protections as you'd have with a credit card. Lose your credit card - call - you're probably only on the hook for $50. Lose your debit card and the amount you owe back depends on when you report it missing - something about if you don't report it w/in 48 hours, you'd best prepare to lose it all...or something....hold on, I'll find a link to explain it better....

Edit: Here's the link www DOT stretcher DOT com/stories/00/001218d.cfm (sorry, not enough posts to add links yet)

[disneysteve]

The best way to describe it is that's its an electronic check.

That's not entirely right. When I hand someone a paper check, they have to deposit it and it will take some time for it to clear my account (unless they are using one of those scanner things that clears it immediately). With a debit card, the money comes out of your account right away. So basically rather than going to an ATM, taking out cash and then paying for your purchase with that cash, you just skip the ATM, swipe your debit card and accomplish the same thing.

As noted, some debit cards have reward programs but most don't and the ones that do aren't usually as generous as credit card reward programs. Also, as noted, credit cards are safer for a variety of reasons and also tend to offer extra protection in the form of payment disputes, extended warranties and such.

I really can think of no reason to ever use a debit card.

[minnie1928]

Another thing to add, the merchant may place a hold on your funds for several days. For example, you go to the gas station. You swipe your card and they do a pre-authorization to your account for $50 to confirm that you have enough money to buy gas. You pump the gas and it costs $20. The $30 difference between the pre-auth and the actual purchase may take a few days to "clear". If you keep a decent amount of cash in your checking account, this won't matter. If you like to keep only a minimum amount in your account, this could cause some problems if you have lots of transactions in a short amount of time.

Personally, I use a rewards credit card.

[disneysteve]

If you like to keep only a minimum amount in your account, this could cause some problems if you have lots of transactions in a short amount of time.

A good example of this is if you happen to be traveling. Rent a car - get a hold on your account. Stop for gas - get a hold on your account. Check in to your hotel - get a hold on your account. Eat at a restaurant - get a hold on your account. Those holds can quickly add up to hundreds of dollars. If you don't keep that much of a surplus in your account, you may find your card being denied and you had better have an alternate form of payment ready.

[maat55]

Debit cards are an convienent way to make purchases like gas without using cash or a check. As mentioned above, the money comes out of your account instantly.

[Seeker]

Debit cards are an convienent way to make purchases like gas without using cash or a check. As mentioned above, the money comes out of your account instantly.

The money does not always come out of your debit account "instantly."

The problems with debit cards are many:

1) Banks do not necessarily post charges in order of receipt. Banks can also fee the account to death if (as others have indicated) holds are placed on the account and overdrafts occur as a result of not having enough money in the account -- banks can and do pay out more than what's in the account and then they charge their customer an overdraft fee.

2) If anyone gets ahold of the debit card number and uses it for an online transaction... you won't know about it unless you check your account very regularly. Someone else also mentioned that there's little protection with debit cards for identity theft or unauthorized usage. A thief very likely can spend all the money in the account (and overdraft it).... and fighting a bank is not the world's most enjoyable process.

3) Merchants like debit cards (no fees for them). You cannot "stop payment" to a merchant if the merchant sends you something that does not operate... etc.

To me personally, I'd rather carry cash around than a debit card.

[jasonnoguchi]

Debit cards are just like ATM cards but they give you the added advantage of being able to make credit card purchases.

[disneysteve]

Debit cards are just like ATM cards but they give you the added advantage of being able to make credit card purchases.

You can't make "credit card purchases" with a debit card. You can use a debit card to make a purchase where credit cards are accepted, but the money is still coming out of your checking account. You aren't being given credit or getting billed at a later date.

[maat55]

To me personally, I'd rather carry cash around than a debit card.

I would prefer to swipe and get back in my truck without going into the store.

I've never had any fee problems, but I like cash most of the time as well.

[mom-from-missouri]

You can't make "credit card purchases" with a debit card. You can use a debit card to make a purchase where credit cards are accepted, but the money is still coming out of your checking account. You aren't being given credit or getting billed at a later date.

Depends on the card--mine is both debit & credit. If I opt to use it without the pin, it acts as a credit card and comes out of my checking account on the 30th.

If use the pin, it acts as a debit card.

Each time I use my card I can decide which way to use it.

Some places, I get reward bucks for using it one way over the other.

[disneysteve]

Depends on the card--mine is both debit & credit. If I opt to use it without the pin, it acts as a credit card and comes out of my checking account on the 30th.

If use the pin, it acts as a debit card.

Each time I use my card I can decide which way to use it

Thanks. I wasn't aware of that feature. When using it as a "credit" card, do you get any added buyer protection as you would from an actual credit card?

[HistoryChick]

Depends on the card--mine is both debit & credit. If I opt to use it without the pin, it acts as a credit card and comes out of my checking account on the 30th.

If use the pin, it acts as a debit card.

Each time I use my card I can decide which way to use it.

Some places, I get reward bucks for using it one way over the other.

2nd this - I wasn't aware that they still made debit cards without cc backing by either visa or MC. I get rewards on both my debit cards and like you, choose which one to use (or which credit card to use) based on % or reward back. If I opt to use a debit card, I just balance my check register when I get home that night and then check that its been reconciled online w/in 24-48 hrs.

Thanks. I wasn't aware of that feature. When using it as a "credit" card, do you get any added buyer protection as you would from an actual credit card?

No - at least not with either of mine - if something happens I still (in theory)only have 48 hours to call the bank to reduce my liability beyond $50. In practice, I did lose a card once in college and had damages taken care of by my bank...I don't remember when I called it in though.

[BigVic]

I have used my debit card for years to purchase everything from groceries to gas and have never encountered one of these "holds" on my account. I'm not saying that they don't exist, just saying that it is not very common for me. I have heard that some very popular night clubs do that since there are so many people that attend at one time, but I've never experienced this on normal purchases.

[terces]

I really can think of no reason to ever use a debit card.

This discussion has got me thinking.....maybe we should switch to a credit card only. We always use our debit card for purchases and shopping (except online). I like it better than cash cause we can really track our expenditures and it comes out of our checking account as we spend it. I've been more hesitant with the credit card cause I'm afraid of getting the big bill at the end. But then the rewards and buyer protection might be worth it.

Something else to think about and decide........