How To Shop Online Without Racking Up Debt by Mary Hunt on Creators.com

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How To Shop Online Without Racking Up Debt

Not only is online shopping convenient but also this global phenomenon has forced companies to provide better and more innovative customer service. As behemoth online merchants, such as Amazon.com and Zappos.com, step up their services to include deep discounts, free shipping, overnight delivery and, in some cases, free return shipping, their competitors are forced to follow suit. But with every great innovation comes a risk. Online shopping has a big one: consumer debt.

Face it. You cannot pay with cash over the Internet, and it's not easy to write a check. Even when you pay directly from your bank account via an electronic check, debit card, PayPal or Bill Me Later (a service that allows you to make your online purchase and pay by sending a check through the mail or electronically), you run the risk of being charged a fee for the service. You also don't have all of the same legal protections that you have when paying with a credit card. Federal law provides great consumer protection when it comes to the fraudulent use of a credit card, and it protects you, the cardholder, if what you buy doesn't show up, the merchant goes bankrupt or you end up in a dispute.

The best way to shop online is with a credit card, but only if you pay the balance down to $0 every single month. If you allow your balance to roll from one month to the next, adding new purchases to the existing balance, your purchases will accrue double-digit interest from the moment you complete the transaction.

You'll be digging your debt hole deeper with every new purchase.

Here's an easy way to retain all of the benefits of paying online with a credit card without running the risk of falling into debt: Open a credit card account, and keep the balance at $0. Use it strictly as a bank account.

If you do not have a credit card that you pay down to $0 every month, go to http://www.IndexCreditCards.com or http://www.CardTrak.com to apply for a no-fee MasterCard or Visa. Use this account only for online payments. Before you make an online purchase, send a check to the card company in the amount you plan to spend. Make sure you note your account number clearly and send it to the correct address. Once that payment shows up in your account as a credit balance, you're good to go. Just make sure you do not overspend your available balance and you never will pay a nickel in interest or fees.

A word of caution: Your credit card issuer may not be keen on your carrying a perpetual credit balance. So do not allow this account to grow. Use it as a management tool. Plan carefully how much you will need to spend to cover an intended purchase. Once you've made the purchase, allow the balance to drop to $0 until your next planned online shopping trip.

Mary Hunt is the founder of www.DebtProofLiving.com and author of 18 books, including her latest, "Can I Pay My Credit Card Bill With a Credit Card?" You can e-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.

Comments

4 Comments | Post Comment

Mary, although i strongly disagree with your opinion on debit cards, I'm not sure what it is you have against paying bills online. I mean, "send a check"? That ended up costing us MORE money. There was a thing on "60 Minutes" a while back, that talked about how some credit card companies actually sit on the checks they receive until they are "late", and then hit people with the $30 - $40 late fee. This actually happened to us; we mailed the check in plenty of time, yet got hit with a $35 late fee anyway.
That did it. I signed up for online bill-pay through our bank, and pay as many bills as we can that way. Our rent is the only thing we still have to write a check for. When the money is sent electronically, the credit card companies CAN'T sit on it, it gets credited when the transfer is made, end of story.
We have NEVER been hit with a late fee since I started doing this. Also, I do use debit cards online, and have never had any problems. If the company if reputable, it's safe, and yes, i HAVE gotten refunds for defective stuff and other issues after using a debit card. If we're not sure of the company, we do use a credit card. For example, it makes sense if we're traveling and staying at a hotel we've not been to before. We know that if the place turns out to be a toilet, we have more protection with a credit card. But no one needs to be scared to use a debit card on Amazon, I've done it for years, they are reliable, and I can feed my Kindle book habit debt-free.
But I guess we are wrong, for using debit cards and online banking. Too bad that our debt is disappearing quickly, and that we will be 100% debt-free within two years. Too bad that what we do is bad. Oh, well.

Comment: #1
Posted by: Christine
Mon Aug 2, 2010 9:49 PM

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Re: Christine--I must have missed the column where Mary said she didn't like debit cards, but I agree with you about on-line banking. I started using the feature over 10 years ago, and back then I figured I was saving about $8 a month in postage. I love on-line banking and debit cards and don't like to write checks. Checks have a way of not getting cashed right away and then suddenly they'll hit unexpectedly. On-line payments show up right away. Very few of our creditors can't be paid on-line and several bills show up on our banking page as ebills, which makes it even more convenient.

Good for you for getting close to being debt-free!

Comment: #2
Posted by: Joannakathryn
Mon Aug 2, 2010 10:55 PM

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I think she said she didn't like using Debit Cards for Online purchases and she's said that many people do better with Cash than a debit card because they can't keep track of their spending with a debit card. There are many risks with using a debit card online. A crook can wipe out your checking account in a heartbeat and then, depending on your bank and the timing of the theft, it can take days to get the money put back in your account. I bought a bunch of stuff online and then promptly made an online bill payment to my credit for the same amount.

Comment: #3
Posted by: Laurie
Wed Aug 4, 2010 11:55 AM

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Re: Laurie--I found out the hard way that when I buy something through the mail or on-line, a credit card is the safest way to go. Years ago, I ordered a diet plan and sent them a check and got nothing back. I called and called, and filed a complaint with the post office, but never got my money back, so I was out $75. When I order on-line, I use a credit card that will protect me if I don't get what I ordered.

Comment: #4
Posted by: Joannakathryn
Thu Aug 5, 2010 9:58 PM

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