Debit Cards

Two Steps Toward Freedom From Credit Card Debt

April 23, 2016 By Twila Van Leer

Balance transfers help you get out of credit card debt.

There are perfectly legitimate ways to reduce the interest and ultimately pay off credit card debt. Personal finance experts suggest you use them.

First Step

Find a card that offers a 0 percent introductory balance transfer promotion and transfer your balance to it. These cards often offer new customers as much as 18 months during which no interest is charged on the transferred balances. The experts consistently track all the cards to find that ones offering these terms and there are reviews that are available to the public. Check bankrate.com.

It pays. Think of it: on a $10,000 balance, $100 to $200 of your monthly payment is sucked up by interest, leaving only about $50 to be applied to the principle.

Second Step

After you have found a card that will charge no interest for a certain period of time, use that time to break free of the debt. Continue to make the payments you would have done previously. Add a little if possible. You will see the overall debt dip very quickly.

After having been swimming upstream trying to make headway against your credit card debt, you’ll see immediate improvement. There simply is no way to make inroads until the high interest can be eliminated as a factor. Use this formula and then repeat the process with additional credit cards to see real progress.

Credit Card Or Debit Card? It All Depends

April 7, 2016 By Twila Van Leer

Which card is better to use between credit and debit?

It’s one of the questions that enters into discussion whenever issues of personal finance come up. And the answer is not as easy as it would appear on the surface. Purchases with both cards are subject to processing that makes a difference. Before you decide how to handle your card-shopping, consider these factors.

Debit Card

When you use a debit card, the transaction usually requires a personal identification number or PIN. The transaction is completed in real time, with the money coming immediately out of your bank account and transferring to the merchant.

Credit Card

A credit card does not require a PIN and is an offline transaction. The funds remain in your account until the merchant settles the purchase. It generally takes two to three days for the transaction to be apparent in your account.

Fees

Before the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress, card issuers could charge different fees for credit card purchases than for debit card transactions. Initially, interchange fees of 12 cents per transaction were set. They rose to a 21-cent cap before the bill was signed into law, but that was still significantly lower than the previous 45-cent fee that had been in effect.

Credit Unions

The law, however, does not apply to thousands of community banks and credit unions that issue cards. It is in effect for financial institutions with $10 billion or more in assets.

The caps tended to dry up the debit card rewards and free banking provisions that had been offered with cards.

Difference

With the regulatory changes it makes less difference if you use a debit card or charge card for your purchases. The major difference now is that a debit card does not help you build credit, while a credit card does. Many debit cards now will run transactions without the use of a PIN, which minimizes the prospects for fraud.

Personal Decision

If you pay off credit card purchases in a timely manner, avoiding the interest charges, the distinction between debit and credit is further neutralized. Most Americans are likely to have one or more of both types of cards in their wallets. How they use them as they shop is a personal decision.

Debit Card Pre-Authorization Holds

February 3, 2014 By Twila Van Leer

You insert your debit card. You pump the gas. You cringe (the current average price- per-gallon for premium is $3.62) and you leave the filling station assuming the $40 total will be subtracted from the balance in your debit card account. Simple, right?

What you don’t know is that behind the scenes, computers are doing their thing and when they are done, your bank may have put a pre-authorized hold on your account. It may be larger than your actual balance, especially if you are chronically hovering about the edges of the account. That means that when you drive from the gas station to the grocery store, your $15 purchase there may not be covered by the debit account.

For example, this made-up scenario: You have $100 in your account balance. You purchase $80 worth of merchandise or services (restaurants and hotels may also use this approach, as well as gas stations). The bank puts a pre-authorization hold on your account for $80. So the $20 you thought you had in the account is not available and additional use of the card will not be honored, which could mean additional fees. Some credit card users have found themselves in serious trouble with overdrafts, not to mention the embarrassment and inconvenience involved.

In essence, your “available” balance and your “actual” balance can be two different figures. The amount of the hold is deducted from your accounts “available” balance but not from the “actual” balance until the transaction that triggered the hold is processed, which could be several days. Paying attention to your “available” balance will help, but given the time frames involved, may not always provide the needed information as quickly as necessary.

“I don’t think the average customer has any idea what goes on behind the scenes when they swipe a card,” said Jeff Lenard, vice president of communications for the National Association of Convenience Stores (which sell about 80 percent of the gasoline purchased in the United States each year.) “The credit and debit card system is incredibly complex.”

The problems associated with pre-authorized holds are only part of the potential trouble with using cards for gas station transactions. Financial gurus also point out that the stations are a “danger zone” for theft of card data for fraudulent uses. Julie McNellely, senior analyst for Aite Group, a Boston-based financial services research organization, describes how bad guys bent on fraud use the stations to achieve their ends.

While customers are using their debit cards to make purchases at the pump, a thief sitting in a car nearby, armed with a laptop, a pinpoint camera and an antenna, has skimmed off the vital information from the card, including, if the camera is able to get a good view, the PIN. Before the unwary customer has even arrived at home, the information may have been put to fraudulent use.

Experts familiar with the potential for fraud at the gas station suggest the use of cash or credit cards, rather than debit cards, when filling up.

All About Debit Cards

November 12, 2009 By Sherry Tingley

Everything seems to be advanced by new developments in technology, even banking and payments. Now, you can shop cashless, thanks to debit cards. In the US, almost everyone has a debit card. Debit cards are of great use and help. If people can learn how to manage or control their use of debit cards, then they are a great resource.

One of the very obvious advantages of using debit cards is that eliminates the need to write checks. For people on the go (those who value greatly every seconds), debit cards are their next best friends. In times when we are in a hurry, we can just swipe our debit cards and payments are done. Another advantage of debit cards is that payments are made easy and hassle-free.

Debit cards, or also known as electronic checks, can be used to pay for products purchased online. Debit cards make online shopping very convenient. So the next time you shop online, worry no more for your payments, debit cards are always beside you. Now, you can also receive instant alerts and confirmation for your payments made through your debit cards. You will receive a text message once payments are made. This new feature of debit cards is very a helpful one.

Having a debit card of your own is simple. Debit cards are issued to bank clients with checking or savings accounts. Most of the time, banks can issue the debit cards as soon as you open a checking or savings account or they can just send you your debit card through mail. All transactions and payments made using your debit card will be credited to your checking account. Once you obtain your debit card, the next thing to do is activate it using an ATM, or by visiting the bank website.

Most, if not all, banks in the US issue debit cards. The very first bank to do this is the First National Bank in Seattle. Debit cards have been of existence since 1978 when the First National Bank of Seattle issued debit cards to their clients, mostly business executives, with large savings account. Since then, US banks such as HSBC, Bank of America, Citigroup, Wells Fargo, Citizens Bank and many more have been issuing debit cards.

It is also because of technology that there have been a growing number of fraudulent activities or uses of debit cards. The best thing to do is never share your PIN with anyone. It is better to be safe than sorry in the end. There might also be people who contact you by email or phone and ask for your debit card PIN and other details. Do not ever give your debit card PIN to these people. There have been a growing number of phishing scams, so beware. Another tip to avoid fraudulent use of debit cards is don’t write down your debit card PIN on your debit card. There are people who do this (those who can’t remember their PINs). Do not be one of them.

With the fast advancement of technology, who knows how debit cards will be used in a year or so. Surely, debit cards are very useful and advantageous. Once you fully understand how these magic debit cards work and what their uses are, you will surely want to own one. For your convenience, you can keep your debit card in a debit card wallet.

Debit Cards

October 29, 2009 By Sherry Tingley

[ad#250×250]Debit cards are gaining popularity these days, primarily due to the recession. People are trying to make wiser choices on spending as there is a constant worry on losing existing jobs. The changing interest rates of credit cards have also pushed more people into using debit cards instead. With debit cards, cash is drawn out from the card holder’s account as compared to credit cards where money is borrowed and repaid with large interest rates. Using credit cards is compared to spending money that you do not really have.

The first debit card was first issued in the late 1970s by the First National Bank. These were primarily given to loyal account holders with good credit and acted similar to a guarantee card. Several years later, the initial debit system was implemented, utilizing the existing credit card and ATM systems. With the emergence of newer advancements in technology, debit card expenses were directly subtracted from a checking account. Symbols such as the Plus, Visa or Mastercard were seen on these cards. Over time, debit cards have outnumbered the use of checks and are frequently used to pay for food and other smaller transactions. It has been predicted that the use of debit cards is a step towards a cashless system.

Debit cards offer several advantages over other modes of payment. In comparison to cash and checks, debit cards are safer to carry when traveling. As a limited amount of cash is deposited into the account, it helps the cardholders control their spending. Similar to credit cards, debit cards can be used to pay for purchases and bills online but do not carry the same high interest rates. In contrast to credit cards, people can easily apply for a credit card even if they have bad credit.

There are number of options available in applying for a debit card, the most common of which is applying for a checking account which also offers a debit card. Some banks give the debit card on site or it can be mailed to the account holder’s address. Upon getting the debit card, it must first be activated through the ATM or through the bank’s online site. Prepaid debit cards are reloadable versions of the debit card can be applied for through PayPal or purchasing through Western Union. Transaction fees may be charged. A third option is having a portion of your salary deposited to a debit card. An initial fee is commonly charged upon the mailing of the card and can also carry a number of usage fees.

In comparison to credit cards, debit cards are known to have less security. When a debit card is stolen, it must be reported immediately and the card must not have been used in order to avoid charges. If reported within 48 hours of being stolen, a charge of up to $50 may be incurred. For notifications of beyond two days but less than 60 can incur larger fees. Beyond the 60 day limit, larger fees may be charged.

Any suspicious items on your financial statement must also be reported immediately. It is also advised to keep all receipts made with the use of a debit card. The account holder’s information can be easily obtained through looking at a receipt which may in turn be used to illegally purchase services or goods.

If the debit card comes with a PIN, it is best to memorize it. Avoid using birthdays as your PIN. Always keep track of your purchases and the amount remaining in your account. Some debit cards allow the account holder to use money reserved for other uses, such as clearing other debits.