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When opening a new checking account you can be certain that your bank is going to provide you with a debit card. These cards provide you with extended flexibility when looking to make payments for purchases via the money in your checking account. You can also use debit cards for withdrawing money from ATMs (automated teller machines). The money is automatically, instantly taken from your account. These cards are not like credit cards where you can make purchases and pay from them when you want.

How debit cards work
 - Cards have PINS (personal identification numbers) that protect you from identity theft
 - If your card is lost or stolen, you are only liable for $50 worth of fraudulent use if you report to your bank within two days and $500 if you report to your bank after two days.
 - You may be charged a fee when using your debit card. It would be wise to ask your bank what the different fees for use are.
 - It is important to not overdraw your checking account when using a debit card.

PIN vs. signature
Most debit cards are either going to require a PIN or a signature, or both. A debit card that utilizes a PIN will deduct your purchases instantly from your checking account. The most common establishments that accept these types of cards are gas stations, supermarkets, drug stores and superstores like Target.

A signature-based debit card will have a MasterCard or Visa logo. These cards can be used anywhere Visa or MasterCards are accepted. Similarly to using a credit card, you give your card to the salesperson, sign the sales slip and that its it! It usually will take two or three days for the funds to be deducted from your account.

As mentioned, it is very common for banks to issue debit cards with both of the above features. If this is the case, you will be asked if you want to use 'debit' or 'credit' when making your purchases.

Identity-theft protection
PIN driven cards offer slightly more security than signature debit cards. Only you should know your PIN whereas anyone can sign your name.

You are protected if your PIN driven debit card is used without your consent. However, you must act fast. Under the Electronic Fund Transfer Act, your liability is limited to $50 if you contact your bank within two days. If you do not, you can potentially be liable for as much as $500.

If your signature based debit card is stolen, both Visa and MasterCard offer 'zero liability' protection. However, this liability protection is only good if the purchase is processed over their networks. If not, you will be responsible for the amount set forth by your card issuer. This amount would be equal to or better than the terms established under the EFTA.

Hidden fees
Debit cards typically have significant fees associated with them. Common costs include a  a monthly fee, a fee for each transaction or a fee every time you use your PIN for making a purchase.

Many retailers consider debit card purchases the same as cash. Therefore, you will likely be given store credit instead of a cash refund or credit to your account when making returns.

When credit cards are used for purchasing goods, you have the choice of withholding payment if the item is not satisfactory. This is called the Fair Credit Billing Act and is protected by federal law. However, debit card purchases are not protected under this law. Therefore, you should proceed with caution when buying expensive items with a debit card.

Also, when making purchases online you should use a credit card. If you have to dispute a charge, you are going to have more protection if you used a credit card than if you used a debit card.

Avoid overdraft
When using a debit card, you always have to be conscious of how much money you have in your account. If you are not, there is a very good chance that you are going to overdraft your account, resulting in bank fees as well as bounced checked and more bank fees. Develop some sort of system that will allow you to keep tabs on your available funds.



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