Tips for Using Bank Debit Cards Wisely

Choose Credit Card Option to Reduce Fees and Fraud Risks

Nov 5, 2009

An increase in bank fees and reduced personal financial budgets mean consumers need to be more money savvy in their financial affairs, especially during the holiday.

Over the years the bank ATM debit card has morphed from the simple automatic teller accessible at the bank's portable money machines. Today, bank debit cards -- with their tiny Visa or MasterCard logos -- allow for direct merchant transactions with use of a pin number or by processing transactions like a credit card. There are a number of reasons why you should select use your debit card as a credit card transaction, including avoidance of additional bank debit card fees and reducing fraud risks.

Credit or Bank Debit Card?

The question has been asked numerous times when the bank debit card is presented in a direct merchant transaction: "debit or credit?" Many pause, then question whether pulling out some form of official picture identification from the wallet is worth the hassle.

While it may be more financially responsible to use the debit card in the first place- accessing money already earned- there is even more to consider if the debit card is to be used with economic finesse. There are numerous reasons to opt for the credit card transaction over the debit card transaction.

Reducing Holiday Fraud & Extending Warranties

Credit card companies extend near zero-liability in the event of unauthorized purchases. Consumer liability for credit card fraud is limited to $50 under the law. For debit cards, however, one must notify the bank within two days to limit liability to $50.

After the 48-hour window closes, liability for lost or stolen debit card transactions can go up to $500, if reported within 60 days. Additionally, credit cards may allow the consumer to reverse or dispute charges.

Credit card transactions may also extend warranties on purchases. This is especially important for big ticket items. The potential for extended warranty protection is lost in debit card transactions.

ATM Debit Card "Blocking" and Hidden Fees

Traveling this holiday? Don't use a debit card for hotels or car rentals if a credit card is accessible. These retailers use a technique called "blocking" to block off hundreds of dollars in a bank account to make sure that enough cash to pay is available at the end of the transaction.

Though this money is not actually transferred to the merchant, it is also not available to the consumer during the blocking period. This is a sure fire way to run out of cash and a reason to switch from debit card to credit card all together in these transactions.

Also, some retailers charge to use a debit card. This charge can be anywhere from 25 cents to $1. Such fees can add up quickly during the Thanksgiving and Christmas holidays. By processing a transaction as a credit card these fees can be avoided altogether.

Read the Fine Print

Before embarking on holiday shopping, take out the debit card information sheet that is rarely completely read when received. Like a credit card, the terms of use provisions for the debit card is really more of a contract once the card is used in the marketplace. By reading the fine print, the debit card consumer will gain the lowdown on the protection offered, or lack thereof, before starting the holiday shopping season.

Once the debit card consumer gets used to replying "credit" when using their bank card this holiday season, the habit will save potential financial pains in the future.

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