As of Tuesday, May 14, 2013
For decades, I’ve pleaded with you to not use debit cards because they are not safe. And for years, I warned my sons about the dangers of riding motorcycles because they are not safe.
Has anyone listened and taken heed? Debit cards are more popular than ever. And on the subject of motorcycles in my family, to date I have a 50-percent fail rate. For me, debit cards are the motorcycles of personal finance.
I’ve concluded that the best I can do now that so many refuse to give up their debit cards (and motorcycles) is to nag, preach and harangue on the importance of crash helmets and safety equipment.
The odds are stacked against you in both debit cards and motorcycle travel. You must know what you are dealing with, how to react and what to do when things turn ugly.
Think like a bank. For you, a debit card is a convenience. For your bank, it’s a huge moneymaker. If you allow your account balance to get too low, you could get socked with big bounce fees. If you forgot to track a few small debits and a large check comes through later in the same day, many banks will hold the small debits and honor the large check first and then charge you a $34 bounce fee for each debit transaction that exceeds your balance.
Create a cushion. If you use a debit card, you cannot afford to let your account run low. Figure out a way to keep a cushion that you never use as your protection against inadvertent bouncing.
Keep track. Banks will not stop you from using your debit card just because your account runs dry. In fact, they are quite happy when this happens so they can whack you with huge fees. Get online access at your bank’s website so you can check your balance and account activity every day.
Stick to cash. Cash is cool because it is limiting. Cash can’t bounce. I find spending cash keeps me more aware of what I’m doing. Plastic just isn’t the real thing. Retailers love to see you swipe a plastic card for payment because they know you’ll spend more in their store than if you are limited by the cash in your wallet.
Deposits slow, debits fast. Don’t assume you’ll have immediate access today to funds you deposited today. Most banks place a hold on deposits for a few days; others for up to a week. And if your debits come through while the deposit is on hold? Brace yourself. It will be just as if you had never made the deposit.
Speak up. Don’t assume anything. A bank’s policies and guidelines can change overnight, so keep up. And if you get burned by your bank, don’t take it lying down. Explain your situation, and ask them to waive the fees and penalties. If your bank or credit union isn’t known for its customer-friendly policies, remember there are plenty out there that are.
Mary Hunt is founder of www.DebtProofLiving.com.
You can email her at email@example.com, or write to Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.
To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.