Ready Money

By G. Patrick Kelley

October 19, 2007 4 min read

READY MONEY

Ways to safeguard your debit card transactions

G. Patrick Kelley

Copley News Service

A large majority of American households now have debit cards, but not everyone understands the pitfalls that can crop up.

Both the Better Business Bureau and Consumers Union offer advice to help card users safeguard themselves and their money.

Debit cards, also known as check cards, may resemble credit cards, but they operate like cash. When you use a debit card, your money is quickly deducted from your bank account, and there is no grace period, according to the bureau.

The Better Business Bureau also said fees may be charged for each use of the card, and the amount of money that can be debited each day or month may be capped.

Jeff Blyskal, senior editor at Consumer Reports magazine, which is published by the Consumers Union, said the best bet is to use a debit card with a Visa or MasterCard logo.

That accomplishes two things: the logo means you can't be charged fees to use the card at , and it also reduces your liability to zero. If someone can make use of your card that doesn't have a Visa or MasterCard logo, your savings could be wiped out.

Even with cards that don't have the logo, most networks for processing debits don't allow merchants to tack extra fees onto purchases. Consumer Reports advises consumers to complain to the store manager, cancel the sale if the fee is not waived, buy elsewhere in the future, and complain directly to the card issuer.

Blyskal also advises people using their debit card at a store to use the "cash back" feature, usually limited to about $50.

"That will save you a trip to an ATM, plus the surcharges at foreign ATMs (not the card's issuing bank) are pretty hefty now."

Blyskal also said consumers shouldn't be swayed by a debit card's reward programs. "They're pretty stingy with the points they award and what you can get with those points," he said.

And don't use a debit card for online or telephone shopping. "Your exposure to fraud is more than with a credit card," and refunds are easier to manage with a credit card, he said.

Finally, "Nowadays, it's very easy ... to lose track of your checking account" with so many merchants accepting the cards, and many couples who both have cards.

"Keep track of your debits" so you can keep track of your balance, he said.

USING A DEBIT CARD RESPONSIBLY

- Know where your card is at all times. If you misplace it, contact your financial institution or card issuer immediately.

- Limit fraud exposure. Debit cards that use a personal identification number for approval are 15 times more secure than signature-based transactions.

- Choose a personal identification number that is different from your address, telephone number, Social Security number or birthday. Do not write the number on the card sleeve or on papers that you carry in your purse or wallet.

- Keep all transaction receipts and compare then to your bank statements. Immediately report any errors or unauthorized transfers.

Source: Better Business Bureau and Consumers Union

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