Never use a debit card?
August 21, 2008 | alternatives, industry | Comments (0)That’s what this guy says on the Huffington Post. Here’s the gist:
Debit cards look, feel, and act just like credit cards. But they operate quite differently. Credit cards allow one to borrow up to a pre-set spending limit, your “credit limit.” (Some credit cards such as Citi’s PremierPass or Diamond Preferred Rewards card, offer “no pre-set spending limit” akin to traditional charge cards, the most famous of which is American Express, but there’s no effective difference.)
Not so with debit cards. Debit cards are a check book posing as a credit card. When you use your debit card, you are writing a check against your bank account. To many people, this represents the advantage of debit cards. Hey, I can’t be financially irresponsible, if I don’t have the money, I can’t pay!
Would that it were so. Your bank wants you to be able to pay even if you don’t have the money. If you make a charge using your debit card and the funds aren’t in your bank account, the bank will honor the charge, but will charge you a fee, somewhere between $25 to $50, per transaction.
Yea, yea, yea, we get it. Don’t use your debit card like a credit card because you get hit with overdraft fees. But why not just educate consumers about this instead of telling them what to do and what not to do?
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