-Protecting Your Account
Your Card Wisely
vs. Credit Cards
open a new checking
account, your bank is likely going to offer you a debit
card, also known as a check card. These types of cards
offer you added flexibility when paying for purchases.
Conventional ATM cards only permit you to withdraw cash
or perform other basic transactions at automated teller
machines. With debit cards, you can perform all of the
same functions as an ATM card, but you can also use the
card to pay for purchases in stores. The money is
directly taken directly from your checking account.
Debit cards do not offer the 'pay later' option that
credit cards do.
PIN versus signature
Debit cards will either require a signature or a
personal identification number, or PIN. A direct debit,
or PIN-based card almost immediately removes the
purchase price from your checking account. These debit
cards are usually accepted at gas stations, drug stores,
supermarkets, and superstores such as Target.
A deferred or signature-based debit card has a
MasterCard or Visa logo and is accepted anywhere
MasterCard and Visa are accepted. Similar with a credit
card, you hand the sales clerk your card, sign the sales
slip and you are finished! It will typically take two or
three days for the purchase price to be removed from
Both types of debit cards are offered by most banks.
Some even enable both debit functions on the same card.
So, when you swipe your card when making a purchase, the
salesperson will inquire if you would like to pay with
credit or debit. If 'credit' is chosen, all you have to
do is sign the sales receipt. If you choose, 'debit',
you will need to enter your PIN.
Being that PIN-based cards require users to enter a
personal identification number, they offer more
identity theft. Anyone can pick up and
use a signature-based debit card.
If a thief uses your card without your consent, you have
some federal protection, but you must act fast. If you
notify your bank within two business days of discovering
that your card is missing, you are only liable for up to
$50. If you wait longer than two days, you may be liable
for $500. It is important to note that both MasterCard
and Visa have a 'zero liability' if your card is used
fraudulently. However, this guarantee is good only if
the purchase transaction is processed over their
networks. If not, the liability terms will then be set
by the institution that issued your card, and those
terms would be equal to, or better than, the terms
recognized under the EFTA.
Debit card typically have fees associated with them.
Some banks will charge a fee every time you use your PIN
for a purchase instead of signing, others charge a fee
for each transaction and/or a monthly a fee for use.
Another possible issue that may arise with debit card
use occurs when trying to make
returns. You may have a
hard time getting a refund for merchandise, being that
retailers typically treat debit card purchases the same
as cash or a personal check. You may end up with a store
credit instead of a refund.
When using a credit card for purchases, you have the
choice of withholding payment if you are not content
with your purchase. The Fair Credit Billing Act protects
this right, but does not apply to purchases made with
debit cards. A good idea would be use debit cards when
making small items and credit cards for large ticket
Using a credit card when buying online is also a good
idea because you have more rights during a dispute with
When using a debit card it is very simple to
your checking account. When you write a check, you have
the register right there to enter the transaction.
However, when you use a debit card, you have to rely on
your memory to subtract the purchase later. You should
look to develop some sort of system of placing receipts
in a place that will help remind you to update your
checking account register.