Monday, March 22, 2010

When to Hold off on the Debit

In our society today, there are so many ways to pay for your purchase. Do you reach for your check, your credit card, debit card, cash, or gift card? The most common way to pay for your purchases is by using a credit or debit card. It's important for consumers to remember that there are many differences between credit and debit cards when you use them to buy something. There's a difference in how the transactions are processed and the protections offered on the cards are different as well. It is important to know when you should and shouldn't use your debit card considering it is linked directly to your bank and as soon as that plastic is swiped, the money is deducted.

You should never use your debit card online. If your card number was to somehow get into the hands of someone with bad intentions, it will only end badly for you since the card is linked to your bank account. Yes, banks do have policies that will put the money back into your account if you notify them of the stolen card number, but it is such a hassle to call the bank and get them to put your money back into your account. It could take weeks to get your money back and maybe you will have to give up a form of entertainment since you don't have that money. Another instance when you wouldn't want to use your card would be when you are putting a sizable deposit down on equipment or another product. You wouldn't want to clean out your entire bank account by putting $3000 down, so instead it would make sense to use a credit card to hold the product you are interested in. It also isn't a good idea to use a debit card in a restaurant because of the amount of people around that could possibly get a hold of your card and have enough time to write down your card information. I never use a debit card at restaurants anymore because one time I was charged four times for my meal. The register kept freezing and the worker running the register assured me I wouldn't be charged more than once, and sure enough when I got home to check my account they had deducted it four times. I had to call the corporate office and it was such a hassle to deal with them, it took weeks to get my money back into my account.

It's also a bad idea to use your debit card for recurring payments. It would be awful if you forgot to put money into your checking account or forgot to subtract the bill payment from your account, then you would be left paying fees for overdrawing. It would be easier just to go to the website for where you are paying the bill every month and do it manually there for yourself, that way you will know you have enough money in your account and you will avoid the embarrassment or overdrawing fees. If you are planning to travel within the next year, but want to book early so you know you will have a place to stay, you should do it with a credit card. Hotels aren't immune to people hacking into their systems, so would you really want your information sitting there for months waiting for you to arrive. Do you agree with any of the reasons on why you shouldn't use your debit card?

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