5 places to never use your debit card
In some situations, using a debit card can expose you to fraud or identity theft.
No doubt about it, debit card usage is a big part of the new normal on Main Street these days as consumers try to manage credit card debt.
According to the TSYS & Mercator Advisory Group Debit Survey 2011, debit is now the preferred payment type in most point-of-sale locations, beating cash, credit cards and checks.
But that doesn't mean you should use debit cards all the time. In fact, there are some places and times that using a debit card is actually a lousy proposition.
For example, using a debit card online can work against you. If you have a problem with the purchase or your debit card number is stolen, it's a huge hassle to get the money restored to your account and make your card number safe and secure again. In the online world, credit cards are usually a better bet. Post continues after video.
Here are some other instances where debit card usage is a bad idea:
- Rental or security deposits. If you have to put money down to rent a car or heavy-duty home improvement equipment, try not to use a debit card. Why? Because the business will actually take the money out of your account in the form of a security deposit. You'll get the cash back when you return the car or equipment. But with a credit card, the money is just "frozen" but not actually charged and you won't ever notice it's gone.
- Restaurants and bars. There are way too many prying eyes around a dining establishment to trust using your debit card. Apart from the risk of having your card stolen, restaurants are one of those rare places where someone actually walks away with your card and you don't see them for a few minutes. Much better to use cash when dining out.
- Regular payments. Businesses love to get their sticky little fingers on your debit card number so they can extract dues straight from your bank account on a regular basis. Whether it's a gym or your insurance company, you're better off using a credit card. That's because if there's a dispute, the business won't take the cash right out of your checking account if they don't have your debit card number.
- Wi-Fi hot spots. Never use your debit card for an online purchase while at a coffee shop or other business that offers free Wi-Fi access. Many of those businesses have unsecured wireless connections, so it's much easier for hackers and scammers to log on and steal your data.
- Any retail outlet where you choose the "credit" option. Debit cards allow you to choose between a debit (having cash taken straight out of your account) and a credit transaction (where the money will be taken out but it could be a few days later). For one, credit purchases cost the retailer more cash in swipe fees, so you could be hurting a small business owner. But the real problem is the delay when choosing credit -- you may forget the purchase and not account for the money. That can lead to an overdraft situation and the onerous fees that can go with them.
Debit cards are great financial tools, and it's easier carrying a card than a wad of cash. But debit cards shouldn't be used all the time -- and the situations listed above should be at the top of your list of "no debit" zones in the future.
More on MainStreet and MSN Money:
All I can say is there are a bunch of people bloggin' here tonigh that don't know crap about debit and or credit cards. For cying out loud people grow up !! People can just as easily steal your cash as your card info. nothing is safe, but I'll tell you this, if your card info is stolen and used, you will get your money back, and a new card with a different # and pin, if they steal your cash, the banks aren't going to go runnning after that big bad robber.
I'll take the plastic.
Truth be known, credit cards and payoff the balance monthly is the best advice because the credit issuer has skin in the game. Go it alone with a debit card, and you are fresh bait.
Where MSN find's these people to write this bilge is suspect. I guess we're supposed to just use our Debit card in the bank.
I use a credit card for everything. I pay it off every month. I have never paid a dime in interest. At the end of the year I get an average of $350 taken off my monthly bill for the points I earn. I don't have to worry about having cash replaced if the card is stolen. The card gives me extra protection on the warranties for the electronics, appliances, etc. that I purchase. My debit card is sitting in a safe and I have never used it. I don't ever use an ATM either because I charge everything, groceries, gas, doctors, etc. on my credit card, so I have never paid an ATM fee in my life. If you can handle a credit card without going overboard and if you pay it off every month it works to your advantage. An extra $350 a year comes is a nice bonus.
Bilge: And that's probably why you pay a ton of interest in payments...unless you pay off your credit card each time within the "no interest" time period given.
I personally gave up credit cards years ago because they could never keep my account straight and (like many banks) rather than admit/correct their mistake(s), they would compound the problem further. I'm sure I"m not the only one who ever had this problem but unlike some, I refused to allow them to snowball me into thinking "I" had it all wrong when in fact, it was them. This is a common ploy they and bankers practice, i.e., making customers believe they NEVER make mistakes. Wrong.
I thought this was going to be like never use it at a shady atm location.
If you use cash.. you pay for it NOW!!! end of "fraud" no problems.. its yours, you paid for it!! so what if someone robs and kills you.. they will do the same for that damn card.. give me a break society.. wheres the CASH?!
MJH2967 - Merchants pay a few cents on the transaction when a debit card is used as "credit', and part of that fee goes to the network and the processors (the in-between companies that process the transactions) and what's left goes to the issuing bank. However, debit cards are not a profitable product for banks; they are typically a break-even product. The issuer - the bank - must take the losses on fraudulent transactions. Not the merchant, not VISA or MC, not the cardholder -- the issuing bank -- and those losses are often more than any interchange income.
AG999 - When you use your debit card as a "credit" transaction, you do not pay finance charges. The transaction will still be a simple withdrawal from your checking account, with no additional cost to you. Even though you're pressing the "credit" button, the card is still a "debit" card and you do not pay any interest or finance charges. You just get the convenience of using the card at places that accept Visa and MC (signature-based), but not PIN-based transactions, like nice restaurants, for example.
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