You must act quickly. The most you can lose is $50 if you report to the bank or credit union that your card is lost or stolen within two days of when you discover the loss. However, your liability increases to a maximum of $500 if you report within 60 days after you receive your bank statement.
If you don't to notify your bank within 60 days after you receive your bank statement, your liability is unlimited. You could lose all the money in your account. Check your bank statements carefully and promptly for charges you didn't make.
Some major debit card issuers provide more protection. Some state laws cap your total loss at $50.
Wednesday, September 2, 2009
Protecting Your Debit Card
A debit card is like a blank check, so you need to guard the card and the account number carefully against loss or misuse. A thief can clear out your bank account before you even know your card is missing.
If your debit card is lost or stolen, or if you think someone is using it fraudulently, call your bank immediately. Follow the phone call with a letter.
Thieves don't even need your card. As long as they have your name and card number, they can order goods by mail or over the telephone. They can wipe out your bank account before you know the card is missing, or even when you still have the card in your pocket. Protect your debit card by holding on to your debit card receipts and check them against your bank statement each month.
Memorize your PIN but don't keep it with your card. Don't choose one that a smart thief could figure out, like your phone number, address, birthday or part of your Social Security number. Never give your PIN to anyone.
If your debit card is lost or stolen, or if you think someone is using it fraudulently, call your bank immediately. Follow the phone call with a letter.
Thieves don't even need your card. As long as they have your name and card number, they can order goods by mail or over the telephone. They can wipe out your bank account before you know the card is missing, or even when you still have the card in your pocket. Protect your debit card by holding on to your debit card receipts and check them against your bank statement each month.
Memorize your PIN but don't keep it with your card. Don't choose one that a smart thief could figure out, like your phone number, address, birthday or part of your Social Security number. Never give your PIN to anyone.
What are the disadvantages of a debit card?
You need enough money in your bank account to cover each purchase.
Since you paid for the purchase at checkout and the money is out of your account, you have less protection if something goes wrong with the purchase. Your bank won't put money back into your account for items that are never delivered, don't work or were misrepresented.
You may have bank fees—such as monthly service charges, per-transaction costs or penalties—for dropping below your required minimum balance. Check with your bank to find out those extra costs.
You have less protection if your debit card is lost or misused than with a credit card.
Since you paid for the purchase at checkout and the money is out of your account, you have less protection if something goes wrong with the purchase. Your bank won't put money back into your account for items that are never delivered, don't work or were misrepresented.
You may have bank fees—such as monthly service charges, per-transaction costs or penalties—for dropping below your required minimum balance. Check with your bank to find out those extra costs.
You have less protection if your debit card is lost or misused than with a credit card.
What are the advantages of a debit card?
It is often easier to get than a credit card.
You don't have to get your check approved or show identification at stores.
You don't have to carry cash, a checkbook or traveler's checks.
Debit cards are more readily accepted than checks, especially when you are traveling.
You don't pay interest charges.
Because checkout lines move faster, storeowners like debit cards. They don't worry about bounced checks or need to take checks or cash to the bank. Debit card processing fees for the merchant are generally lower than credit card fees.
You don't have to get your check approved or show identification at stores.
You don't have to carry cash, a checkbook or traveler's checks.
Debit cards are more readily accepted than checks, especially when you are traveling.
You don't pay interest charges.
Because checkout lines move faster, storeowners like debit cards. They don't worry about bounced checks or need to take checks or cash to the bank. Debit card processing fees for the merchant are generally lower than credit card fees.
Debit Card or Credit Card?
What's the difference between a debit card and a credit card?
While a debit card looks like a credit card, it works more like cash or a personal check. You "pay now." With a credit card, you "pay later."
Debit means "subtract." When you use a debit card, you subtract money from your own checking or savings account. As with credit cards, you use it in stores for purchases. At check-out, the card reader electronically contacts your bank and subtracts the amount from your account. The money you have in your bank account limits how much you can spend. However, if you are not careful in watching your daily account balance, you can over withdraw your account. Some systems will allow you to use your debit card when you don't have enough money in your account to cover the purchase. This can result in hefty overdraft fees.
Using a credit card is somewhat like taking out a loan from a bank or other financial institution. You have to pay back the credit you used each month. If you pay back less than the full amount you owe each month, you pay interest on the amount you don't pay back. The credit card company sets the total amount you can charge based on your credit history, income, debts and ability to pay.
Some cards are dual-purpose credit/debit cards. Before you swipe the card through the reader, you select a "credit" or "debit" button on the reader. If you select "debit," you then enter your Personal Identification Number (PIN).
If you select "credit," you are given a credit receipt to sign. "Credit" charges will appear on your next charge account bill.
While a debit card looks like a credit card, it works more like cash or a personal check. You "pay now." With a credit card, you "pay later."
Debit means "subtract." When you use a debit card, you subtract money from your own checking or savings account. As with credit cards, you use it in stores for purchases. At check-out, the card reader electronically contacts your bank and subtracts the amount from your account. The money you have in your bank account limits how much you can spend. However, if you are not careful in watching your daily account balance, you can over withdraw your account. Some systems will allow you to use your debit card when you don't have enough money in your account to cover the purchase. This can result in hefty overdraft fees.
Using a credit card is somewhat like taking out a loan from a bank or other financial institution. You have to pay back the credit you used each month. If you pay back less than the full amount you owe each month, you pay interest on the amount you don't pay back. The credit card company sets the total amount you can charge based on your credit history, income, debts and ability to pay.
Some cards are dual-purpose credit/debit cards. Before you swipe the card through the reader, you select a "credit" or "debit" button on the reader. If you select "debit," you then enter your Personal Identification Number (PIN).
If you select "credit," you are given a credit receipt to sign. "Credit" charges will appear on your next charge account bill.
Understanding Debit Cards
Janet uses her bank debit card for almost all her monthly purchases. Asked why she doesn't just pay with cash, she says that she prefers the convenience of a debit card. "It's safer than carrying cash. And you don't have a huge bill to pay at the end of the month."
"I like the pay-as-you-go concept where you only spend what you have rather than borrowing" as you would with a credit card, she adds. And of course, if you don't pay off your credit card completely each month, "there are the hefty credit charges." They can run 9 percent to 20 percent.
If you want the convenience of a credit card, but don't want interest payments or a large bill to pay off monthly, then a debit card may be the answer for you, too. Debit cards work like cash or a personal check. The money you "charge" is automatically deducted from your bank account.
Yet, debit cards don't have the same protections from unauthorized use as credit cards.
"I like the pay-as-you-go concept where you only spend what you have rather than borrowing" as you would with a credit card, she adds. And of course, if you don't pay off your credit card completely each month, "there are the hefty credit charges." They can run 9 percent to 20 percent.
If you want the convenience of a credit card, but don't want interest payments or a large bill to pay off monthly, then a debit card may be the answer for you, too. Debit cards work like cash or a personal check. The money you "charge" is automatically deducted from your bank account.
Yet, debit cards don't have the same protections from unauthorized use as credit cards.
Reloadable Debit Card
A reloadable debit card can be used like a credit card but the limit a user can spend is based upon his or her own deposits into the account. Lenders that offer prepaid accounts usually wave fees if the user's check is directly deposited into the account and the total amount per month that is deposited totals a minimum amount set by the terms of the agreement. Not having direct deposit will mean paying a monthly service fee. The monthly service fees are normally lower than fees imposed by banks for checking or savings accounts. A user never has to worry about NSF fees, late fees, annual fees, or overdraft fees with a reloadable debit card. Some of the features include easy bill pay, free account alerts by email or text message, and being able to access cash from any ATM machine. Banks normally guarantee approval if the applicant can provide sufficient identification information. This can usually be accomplished with a driver's license number, social security number, or a birth certificate. Most companies will want at least two forms of identification and may ask that the applicant fax documentation for proof. Users can load cash at a retail location onto a reloadable debit card or they can have their employer directly deposit their paycheck into the account. Sites online have a direct deposit form that can be given to the user's payroll department. The information needed is similar to a regular checking account that uses a routing number for direct deposit. Many retailers allow a person to cash his or her paycheck at the register and at that time can load part or all of the funds onto a prepaid card. In addition, there are some stores that offer a prepaid card to anyone who can supply the necessary identification. "So teach us to number our days, that we may apply our hearts unto wisdom" (Psalm 90:12).Many people today find using a card instead of carrying cash easier. Cash is a little harder to keep up. The change can be very bulky and can weigh down a pocket or a handbag. In addition, it makes it easier to shop online because most online retailers take credit cards. A reloadable debit card can be used as a credit card. Using the account as a debit is possible as well but the user will have to enter a pin number at the time of checkout. This type of account is very attractive to people who do not have a checking account. Those that have a checking account but do not have direct deposit may want to consider a prepaid account for times when they may be out of town and need to cash a payroll check. Prepaid accounts can usually be accessed by the issuer online so that the account holder can view an online statement showing all of the transactions made to the reloadable debit card. Some issuers allow online electronic bill pay. One monthly fee is usually due for a specific amount of payments made. Those who would prefer having a paper check mailed to creditors can opt for this service but will normally have to pay a fee that is charged per check issued. An online statement will show all types of transactions made on the account and the statement can be printed out. In addition, a user can find out the balance left on his or her card by accessing the account online.Using the account as a debit instead of a credit may cost a small fee for each time a pin number is needed. A debit transaction allows a user to get cash back when making a purchase. This fee is usually smaller than an ATM fee would be. Accessing cash on a reloadable debit card can only be done by either going to an ATM or using it as a debit at the grocery store. ATM withdrawals have a daily limit associated with them. Using the card as a credit at any retailer is free including online purchases. Some lenders offer money sharing between members who have accounts with the issuer. This can be done by following instructions that are located on the issuer's site online. When making gasoline purchases more than the amount purchased may be held by the gasoline merchant. This just means that there needs to be extra funds in the account in case the merchant automatically holds a higher amount until the transaction is completed. Once the transaction is completed the extra funds held will be available in the reloadable debit card account. The prepaid account can also be used to make reservations for hotels and rental cars but again the merchant may place more funds on hold than the actual charge will end up being so there should be extra funds available to cover this extra amount.After making a contribution to a reloadable debit card the funds are normally available within 30 minutes after the amount is loaded. Other features include no credit check needed for approval, guaranteed approval, and free unlimited purchase transactions. Thousands of retailers participate in the program making it easy for a user to find a place to reload funds. Issuers provide customer service via online or by containing a representative through a toll free number. Prepaid cards can be used at any place that takes debit and credit cards which includes millions of locations including catalog purchases.
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