Debit Cards Pros and Cons
Debit cards are so easy to use and keep you from having carrying around large sums of cash. There are some hidden costs associated with debit cards that consumers may be unaware of. Learn what situations will trigger these hidden charges and you will save yourself aggravation and money:
Overdraft charges – If your debit charges exceed your balance you will be charged an overdraft fee by the bank. The fee can be as much as $39.00 per overdraft. If you have more than one overdraft the fees can add up quickly. Consumer advocates suggest declining overdraft protection, if you can and maintaining at least $50.00 in your checking account as a cushion. Also sign up with the bank for text and e-mail alerts when your balance is low.
Out of order transactions – I have personally been hit with this one. Some banks process your day’s expenses from biggest to smallest. This works against you because say for example you have $200.00 in your checking account and you have two purchases of $25.00 each and then spend $225.00. You would only have one overdraft fee if the bank went in the order of your purchases but if they process the $225.00 purchase first – the other two purchases also trigger overdraft fees. Consumer advocates suggest looking for a bank that processes transaction chronologically.
Limited protection - U.S. law will protect credit-card purchases from liability if you paid with a credit card and the item is damaged or doesn’t ever get to you but this protection doesn’t extend to debit cards. Consumer advocates suggest always using your credit card when you buy online so you have that protection.
International fees - If you are overseas and pay with your debit card you may get hit with foreign exchange fees. You may also get charged these fees if you buy online from a foreign source. Consumer advocates advise looking for a bank that waives this fee.
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