Personal Financial Tips

Archive for the ‘Debit Card Protection’ Category

If you have the Internet, you have probably seen the myriad shopping sites where you can buy all manner of goods and services. However, you might be cautious about buying online because you are unsure of how safe the system is, or how to go about buying something on the Internet. If you need some advice on how to shop online, then here are some useful tips to get you started.

Why shop online?

Shopping online is one of the easiest and most convenient ways to buy products. You don’t have to leave your house to queue at shops, and can compare prices much more easily. Also, because online retailers often have lower overheads than normal shops, you will find that prices are generally cheaper online. If you want to find the best deals on a product quickly, then shop online.

Credit or debit?

When shopping online, you might have the option to pay by credit or debit card. But which type of card should you use? Well, whilst paying by debit card is better for your debt because you have the money, it is much safer to buy online using a credit card. Credit cards have many more security features than debit cards, including buyer protection. If possible, always use a credit card when shopping online.

Keep records

Whenever you purchase anything online, you will likely be sent an email with the details of your purchase on. As well as keeping this email, it is advisable to print the details out and keep them safe. This way you have a paper record of any purchase that you make, just as you would have a receipt for a regular purchase. This will help you to resolve any issues should things go wrong.

Use only trusted sites

Although shopping online is safe, it is important to stick to well-known and trusted sites. Smaller Internet retailers might not have the safety features required to keep your card number completely safe. Also, trusted retailers are more likely to deliver your product quickly and without hassle.

Agreements and small print

Whenever you buy online, there is likely to be an accompanying agreement detailing the terms and conditions of the purchase. Although many people don’t read these agreements, it is important that you do, because they often include terms that make it difficult for you to take action should you receive bad service. Always read all agreements and small print so that you know where you stand should you need to dispute a transaction.

Virtual cards

If you make a lot of purchases online, then you might want to think about getting a virtual credit card. This is just like a normal credit card, but all transactions and details are based online. This is a great way to separate your offline and online purchases and keep track of your spending. It is also possible to get the number regularly changed, making online purchasing more secure.

A bank overdraft simply refers to the situation whereby the account owner writes a check, withdraws cash, or uses a credit/debit card in an amount that exceeds the actual balance in the account. (For example, writing a check for $100 when the checking account only has $50 left in it).

Throughout most of the history of banking, people did not have access to debit or ATM cards. Rather, they wrote checks. When they wrote a check that presented the bank with an overdraft situation, the bank would simply refuse to honor the check. This would result in one or both parties involved in the transaction – both the writer and recipient of the check – being liable to pay an overdraft fee of $100 or more, in many cases.

Fast forward to about a decade ago, when some savvy bankers hatched a scheme called overdraft protection to get more customers (and make more money in fees). By its name alone, overdraft protection sounds initially like it is something that is actually protecting the account holder. Well, this is both true and untrue, for it depends upon what you mean by “protection.” On the one hand, overdraft protection does protect the account holder in terms of not having their check (or debit transaction) get rejected by the bank. In other words, the bank will still honor the transaction even if the account is overdrawn.

However, there is another side to this coin. Even though the bank honors the transaction (by paying any portion that is overdrawn up to a prescribed limit), the bank also immediately and automatically charges the account holder an overdraft fee of $25, $35 or more. This does not sound like much money, but it can easily add up to hundreds of dollars a year in fees. Even a small transaction that overdraws the account by just a few additional dollars can incur this hefty fee – automatically.

So, the term overdraft protection is a bit of a wolf in sheep’s clothing. It sounds like it is in place to help protect the bank customer, when in reality it may actually hurt them more than it helps. It hurts them because it causes them to pay a large dollar amount to the bank in the form of fees each month.

To add insult to injury, studies have shown that many large banks practice something called transaction stacking, whereby they re-arrange the order in which transactions are processed on a given day in order to increase the chances of more overdraft fees being charged. In this scenario, these banks will process larger transactions first, which can cause the account to become overdrawn. Then, they process the remaining, smaller transactions, which then triggers the overdraft charge 2, 3 or more times.

Another consumer gripe: banks tend to enroll people in these programs automatically. (This automatic-enrollment practice may be changing, however, due to new congressional legislation).

In summary, here are some overdraft protection pros and cons:

Pros:

1. The bank will cover your check or debit transaction so that the payee does not become inconvenienced and you do not need to do the transaction over again.

Cons:

1. Transaction stacking can result in your paying fees multiple times in a single day if your account becomes overdrawn, potentially adding up to $100 or more in fees alone on a single day.

2. Debit card transactions are allowed to be processed, even if a bank account is overdrawn. With overdraft protection, your bank will not reject these transactions (which it otherwise would if this type of protection were not in place). The result: you could end up paying $38 for a $3 cup of coffee.

Fortunately, some banks are now sprouting up that do not charge overdraft fees, ever. Instead, for a small monthly checking account fee, they will cover any and every overdraft you have (up to a prescribed limit) without ever charging you a fee.

Prepaid debit cards give its holders the convenience of paying with plastic without the risk of bad debt. However, that doesn’t mean owners of debit cards can let their guard down. True enough, incorrect use of debit cards can still lead one into trouble. In this article, let us discuss eight practical suggestions on how to spend with prepaid debit cards safely:

1. Put your personal spending in check. Unlike a credit card, a debit card does not give the privilege to make advanced purchases. However, if you deposit a large amount of money in your account, there is still the tendency to spend your cash on unplanned purchases. A cardholder must always be in control over his/her spending.

2. Monitor your purchases. The best way to keep track of your spending is to list down every transaction you make using your debit card. Keep a record of all your transactions so for your personal reference.

3. Avoid overdraft fees. Generally, debit cardholders are not allowed to exceed their borrowing limit. Nevertheless, there may be instances when your payment will be accepted even though the available fund in your account is insufficient. Watch out! You may be charged with an extra fee for these transactions. Overdraft fees can range from $30 or more, depending on your debit card. In order to avoid encountering this kind of problem, it is advised to always check your debit account.

4. Look out for “holds”. Hotels and car rental companies usually impose a “hold” on debit cardholders when placing a reservation. Be sure that you understand the merchant’s policy on “holds” such as how long your funds will be frozen and the exact amount that will be placed on hold. Furthermore, make sure that you have enough cash in your debit account to pay for the transaction, aside from the cost of “hold”.

5. Choose a strong PIN code. A strong PIN code can protect you from unauthorized transactions. It is wise to create a password that has both letters and numbers. Moreover, the use of your personal information as PIN code should be avoided since these can easily be guessed by identity thieves.

6. Check your account often. Make it a habit to check your debit account online regularly especially after you used your card for payment. See to it that you were not charged for additional fees that you are not aware of. The Federal Law protects debit cardholders from unauthorized transactions but there is a limit ($50). In addition, you need to inform your bank about the unauthorized charges within 2 days after the transaction was made.

7. Never link your card to your savings accounts. To protect your bank details, do not link your debit account to your savings account.

8. Avoid using your card for large purchases. If you want to make a large purchase online, it’s best not to charge it to your debit card. Always remember that debit cards offer only limited protection for buyers. By using a credit card on large purchases, you can enjoy Fraud Liability Protection and the option to dispute charges should you need to.

Copyright (c) 2010 Tara Tiemann

Many people assume that because the card is issued by their banking institution, their debit card must be completely safe. Although a debit card seems the same as any credit card and is advertised by all the banks as “easy”, “secure” and “simple to use”, this is far from the case. There are underlying similarities and of course, in appearance, they seem exactly the same.

Similarities are not all that you need for the credit protection and security that you are guaranteed through any major credit card. The main difference between these two types of cards had some serious disadvantages for the user.

While credit cards are a financial tool wherein the consumer makes a purchase and borrows money directly from the credit issuer. Debit cards present a whole new financial picture. When using a credit card, the consumer is aware that each time they are charging anything, he or she is incurring debt along with that purchase.

The borrower has the option of whether to pay off the balance in full right away or pay it off over a period of time and pay the additional interest. This is a simple way of borrowing with set rules, simple to follow terms and the consumer is always aware of any fees or interest rates.

Debit cards, on the other hand, work in a completely different way. These debit cards are also a financial tool wherein the consumer makes purchases using the money they currently hold in their linked bank account that already has funds available.

This presents a number of disadvantages for anyone aware of the underlying problems that these newly created debit cards hold. The first and foremost problem that can be seen easily with the use of debit cards is that they offer virtually no protection against fraudulent use.

While they may offer more protection than they did in the past, the amount of protection and types of protection can vary depending on the banking institution and their regulations. This is especially true if a debit card has been stolen and is not reported in a timely manner.

Most banking institutions will only cover a very small amount of what is fraudulently charged when a debit card is stolen and used. While with your average credit card, you are fully protected for the full amount of the fraudulent charges.

This puts you, the consumer, in a much weaker position when using your debit card instead of your credit card. When a thief makes a fraudulent charge on your debit card, the merchant who sold the item already has the money in their account transferred as soon as the transaction takes place. With a credit card this is not the case and the merchant has to wait for the credit issuer to make the payment to them.

That means for the consumer, that if a dispute has to be filed because of a fraudulent charge, that while the dispute is in process, your money remains with the merchant and not back in your bank account.

What this means for the consumer is that bills might bounce, payments might not be paid on time and your account has less money than you figured until the dispute is settled. How many of us, in this day and age and with the economy in the state that it is in, can afford to have our money on hold?

With a credit card however, as soon as you file the dispute, the charges are removed from your account, you are protected as the consumer and the immediate fault is found in the fraudulent charge instead of in your bank account.

While using money from your own bank account does not seem like a problem, it can have a huge impact when fraud or any type of disputes arise. Even though the fraudulent charge may be decided in your favor in the end, it takes some time to resolve the problem and who wants the worry of having your money in limbo in the meantime?

Even though the debit cards are starting to offer more rewards and trying to keep consumers charging away, luckily consumers are wising up and stopping the madness. These debit cards, no matter how attractive they seem because of the marketing hype, still have far less valuable rewards and benefits than credit cards can offer.

Know somebody whose birthday is coming up and you need to buy them a gift? Or, maybe you need to buy someone a congratulations, graduation, thank you, or special holiday gift. It can be hard to know exactly what to buy that special person.

Gift-giving is not as easy as one might expect. You would think it would be a cinch, what with the thousands of products and services available online or in nearby department stores. In reality, though, the more choices you have, the harder shopping becomes.

Compounding the problem is that, in the modern era of instant gratification, most people of any means at all will just go out and buy what they want or need. Translation: anything you could buy this person that they would actually want – they likely already have.

Traditionally, the solution to the problem of what to give someone as a gift has been solved by giving the gift of cash. Stuffing a midsize or large bill into an envelope with a card has been a socially-accepted way of giving gifts for decades. Trouble is: it’s a bit boring and uncreative.

So, what can you do if you are stuck between the inability to choose amongst a million products on the one hand and the choice to give boring old cash on the other? Answer: give them a debit gift card.

Debit gift cards are simply pre-paid cards that carry the symbol of a major credit card issuer like Visa, American Express, or MasterCard. The recipient uses them just like a credit card, right up to the denomination or value with which it was originally loaded.

If you are considering buying a debit gift card, here are 5 reasons they are better than giving products or cash:

1. Safer than giving cash:

Cash can get lost or stolen. But, with a prepaid debit card, if it is lost, the recipient can choose to immediately call in the card number to get the card frozen from making future purchases. You can’t do that with cash!

2. Debit cards are more fun to receive than cash:

When it comes to gifts, receiving a prepaid gift card feels a lot more exciting than just getting cash. It gives the impression that you put some extra forethought into the gift, rather than just pulling some cash out of your wallet and sticking it into an envelope. Plus, unless you went to the trouble of getting them a crisp, new bill from the bank: cash is just plain dirty – quite literally.

3. Offers protection against damage or loss of purchased items:

Most prepaid debit gift cards come with product purchase protection. This means that, if the recipient should make a purchase of certain goods and they get lost due to theft or are damaged within 90 days, the issuer will cover the replacement costs. (Check your card’s policy for details before buying).

4. No need to run a credit report or apply:

Of course, to use a traditional debit card you need a bank account, and to use a credit card you must go through a lengthy credit application. Not so with prepaid gift cards! You can buy one over the counter or online and have it shipped directly to the recipient.

5. They can check their balance online or by phone anytime:

If the recipient needs to know their balance, they can check anytime by calling the phone number provided with the card. The same number can also be used to report the card if it is stolen.

Consider these 5 benefits of giving someone a prepaid debit card as gift instead of products or cash.

As society increases it’s reliance on technology, consumers are the inevitable benefactors of increasingly convenient shopping solutions. The use of the personal credit and debit card has become extremely common in recent years. It’s virtually unheard of to find a merchant who doesn’t accept major credit cards, and they are increasingly required to complete certain transactions, such as online shopping and most travel reservations.

Most people don’t have problems with these requirements, but for people who can’t qualify or don’t wish to have traditional credit cards, prepaid credit debit cards are a great option.

Before applying for a prepaid card, however, it’s prudent to examine the situation and ensure that it’s really the best option. For an individual who is able qualify for a traditional credit card, it’s probably more helpful in the long run to use the traditional method. Prepaid cards cannot build a person’s credit history, which will be necessary for larger purchases such as cars and homes.

Additionally, since “loading” the prepaid card requires parting with the cash upfront, a family or individual with a tight spending situation needs to be careful to ensure they will still have the cash flow necessary to pay other bills in a timely manner. Also, if prepaid credit debit cards are used on a repeated basis, the user should ensure that whatever card is chosen offers convenient reloading options.

Generally speaking, prepaid cards are more beneficial to user’s who can’t qualify for a traditional credit card, usually because of credit problems. Some banks also require debit card users to pass certain checks, which may limit usage of debit cards for some individuals as well.

Prepaid cards can also be a good idea for anyone who is looking to tightly control their spending. Overspending is not an option with a prepaid credit debit card, since there is no overdraft protection and no line of credit is actually being extended. Before applying, users should be aware of a few things. First, it’s important to fully understand the fees associated with opening an account and, sometimes, with reloading the card. Users should also double check the spending (or loading) limit on the card of their choice.