Debit cards are useful financial tools as they offer the convenience of plastic — without the risk of racking up debt. Just like credit cards, though, debit cards can lead to trouble if not used wisely. Here are experts’ nine best tips for managing your debit card. 
1. Know yourself. Do you have bad money habits, such as not balancing your checkbook, losing receipts and getting hit with overdraft charges? If so, avoid pulling out your debit card every time you crave a latte, and pay cash for everyday purchases. “The debit card is a great tool, but it’s not for everyone,” says Susan Tiffany, director of consumer periodicals for the Credit Union National Association. “Just ask yourself upfront: ‘Am I the kind of person who’s going to run into trouble with this?’”
2. Keep track of transactions. Keep good records to avoid bounced checks, overdraft fees and stress. “Write down every purchase right away in your check register,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. This goes double for those who have joint accounts, according to Catherine Williams, vice president of financial literacy for Money Management International, a national credit counseling firm. “It’s really important that you both record all your transactions and be in close communication with each other,” Williams says.
3. Don’t automatically “opt in.” This summer, new federal regulations prohibit banks from allowing customers to overdraft with debit cards unless they opt in. Banks are urging customers to do so, but Leslie Parrish, a senior researcher at the Center for Responsible Lending, says 80 percent of consumers would rather have their card declined at the checkout counter than get hit with a $30 or more overdraft fee. “Your debit card could become your most expensive credit card if you don’t have enough money in your account and are extended credit,” Parrish says. Instead of opting in, Linda Sherry, national priorities director for Consumer Action, recommends you set up your own overdraft protection by linking your card to a savings account or a line of credit.
Your debit card could become your most expensive credit card if you don’t have enough money in your account and are extended credit.
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– Leslie Parrish
Center for Responsible Lending |
4. Watch out for holds. Before using your debit card to make hotel reservations, rent a car or even buy gas, ask whether any holds will be placed on your account — and how much and how long those funds will be held. If you don’t want your money tied up for what could be as long as a month, consider using a credit card for hotels and rentals instead, Tiffany recommends. (Or, make the reservation with a credit card and pay the final bill with your debit card.) “If you’re traveling and don’t have the balance to cover the holds they’ve placed, you could go to buy dinner and have your card declined,” Tiffany says.
5. Know the difference: debit versus credit. You’ve just swiped your card to pay for a new pair of jeans, and the clerk asks, “Debit or credit?” If you choose “debit” and punch in your PIN, the transaction happens online and is processed right away. If you choose “credit” and sign instead, the transaction may hit your account several days later, leaving you to think you have more money in your account when you don’t.
6. Be smart about choosing a PIN number. Try to choose a random combination of numbers that you can remember easily, and avoid choosing a PIN that a criminal could guess, such as your initials, your kid’s birthday, the last four digits of your Social Security number or numbers in sequence, recommends Greg Meyer, community relations manager for Meriwest Credit Union. “You wouldn’t believe the number of people who want to choose 0000 or 1111,” Meyer says. “That’s just asking, ‘Please rip me off.’”
7. Go online daily to check your account. Stay on top of every transaction to find out right away about unexpected fees or holds, accidental double charges or fraud. This is especially important with debit cards because any money you lose is your own — not the bank’s, says Tom Harkins, chief strategy officer for Secure Identity Systems and former vice president of security and risk for MasterCard International. By federal law, your losses from fraudulent activity on your debit card are limited to $50 — but only if you notify your bank within two days of noticing a problem.
8. Be careful when linking accounts. If you’re going to link your debit card checking account to a savings account, avoid exposing too much of your money to fraud, Harkins says. “The more accounts you link, the more you’re giving fraudsters free reign,” Harkins says. Your liability might be limited, but it could take days or weeks for the bank to reimburse you. “That’s the risky part — your money is gone, and the mortgage is due tomorrow, you’re going to start bouncing checks and you can’t even make an ATM withdrawal,” he warns.
9. Use a credit card for big purchases. The bottom line: Debit cards don’t offer as many consumer protections as credit cards. Cunningham recommends making large purchases — such as stoves, refrigerators or plane tickets — with a credit card. “You might want that product protection in case there’s a dispute down the road,” Cunningham says. A real-life example: When Steve Rhode, a consumer debt expert at GetOutOfDebt.org, lived in England, he used his credit card to buy plane tickets to fly his family back to the United States, but the airline went out of business before his trip. “I was able to file a claim with the credit card company and they wiped off the charge,” Rhode says. “If I had used a debit card, that money would have been gone for good.”
By Allie Johnson (via CreditCards.com)
Tags: Debt, debti card, fees, Tips
17.May.10 
Budgeting, Debit Cards 
Comments (0)
Think all that’s in the fine print of your credit card is trouble? There may actually be some good news in there: hidden perks, from car rental collision insurance to return protection, that can save you cash.
Introduced to convince cardholders they were getting a bargain despite a hefty annual fee, many of these extra benefits fell by the wayside over time, forgotten in a sea of fine print. But hidden benefits may be seeing the light of day once again. “Over the last 20 years, we saw a dip in benefits,” says Heather Loftus, vice president of Affinion, a marketing company that handles benefits for a number of credit card companies. “Now there’s a renewed interest in making the consumer aware of what they have.”
Call your card issuer
So what’s the best way to figure out what your card actually entitles you to? Call your card issuer and ask for a list of benefits, or search for “cardholder benefits” on your card’s website. While it may be a pain, it’s time well spent, says Ramit Sethi, author of “I Will Teach You To Be Rich.” “You can save $500 a year easily just by using a couple of these benefits.”
Sethi should know. A few months ago, he panicked when he accidentally dumped a cup of coffee onto his brand-new Mac laptop, totally frying it. A repairman estimated it to be a $600 fix. But then Sethi remembered that the Visa card he’d used to buy the computer offered a 90-day guarantee against loss or breakage. “I called and said, ‘I’d like purchase protection to go into effect on this.’ They said, ‘Great, we’ll send you the form.’” A bit of paperwork later, his card ended up covering the entire repair fee.
Of course, as with all credit cards, “the devil is in the details,” says Loftus — so pay attention to the fine print. But first, check out our list to see what perks you might be missing out on, how much they could save you and how you can take advantage.
Perk: First crack at concert tickets.
How it works: Don’t have a prayer of scoring seats at the Lady Gaga concert? Some card issuers offer presale or preferred seating tickets to hard-to-get-into concerts and sporting events; others offer supercheap seats. When Citi rolled out its Private Pass feature, it sold select concert tickets to cardholders for $5 a pop.
What it’s worth: While it may simply save you the stress of trying to nab tickets when they go on sale to the general public, a $100 ticket through your credit card could save you a scalper’s $100 to $200 markup.
What’s in the fine print: The deals come through a third party such as Ticketmaster, so you’ll still have to pay their hefty service fees. Plus, don’t expect a discount, just a chance to buy tickets before your friends do.
Perk: Rental car insurance coverage.
How it works: According to a 2007 survey, one third of drivers spring for extra collision insurance when they rent a car. But most credit cards offer collision insurance for rentals, covering whatever your primary car insurance won’t.
What it’s worth: Prices vary, but a loss-damage waiver often costs an extra $28 a day, so taking a pass on a one-week rental could save you almost $200.
What’s in the fine print: You may not be covered for long-term rentals or rentals in some foreign countries, such as Israel or Ireland. Certain kinds of cars, such as trucks and campers, are excluded. Plus, while your credit card may cover damage, the issuer may resist ponying up for loss-of-use fees while the rental is out of commission.
Perk: Guaranteed returns.
How it works: If you buy an item that gets lost, stolen or destroyed within the first 90 days, your credit card will cover the cost of replacing or repairing it, even when the store that sold it to you won’t take it back. With some cards, you can get your money back, even if you just feel a twinge of buyer’s remorse.
What it’s worth: Card issuers put their own dollar cap on the perk; for Visa Signature cardholders, you can get back up to $500 per item. With American Express, it’s $300 per item or up to $1,000 a year.
What’s in the fine print: Expect to fill out some paperwork or provide proof that what you bought got destroyed. Plus, some cards maintain a list of products that aren’t covered — everything from antiques and jewelry to DVDs and computer software.
Perk: Cell phone replacement insurance.
How it works: If your cell phone gets damaged or stolen, your credit card will buy you a new one.
What it’s worth: Up to $200 for some cardholders; that’s the amount that Citi will pay for your new phone. But you’ll have to kick in a $50 co-pay, so unless you’re using a high-end phone, it may not be worth it.
What’s in the fine print: To be covered, you have to pay your monthly cell phone bill with your credit card, and you may have to file a police report or other paperwork to prove that your phone is gone. Plus, loss isn’t covered, so if you left it behind at the movie theater, you’re out of luck.
Perk: Trip cancellation coverage.
How it works: While only 15 percent of cards offer it, travel cancellation insurance reimburses you the cost of nonrefundable flights if an emergency or illness derails your travel plans. A handful of cards, including the Chase Sapphire, offer protection against travel delays; you’ll get back whatever you spent on meals and lodging while you were stranded during a snowstorm.
What it’s worth: You can get back up to $2,500 from Discover if illness forces you to cancel your trip, and $125 per day if your trip is delayed.
What’s in the fine print: Only a few reasons are considered just cause to cancel: the death of an immediate family member, a serious illness or an injury. You won’t be covered if a pre-existing condition flares up or if your destination turns into a war zone. You’ll also have to provide a doctor’s note to prove your case.
Perk: Cash without an ATM.
How it works: Discover’s Cash-Over program lets cardholders essentially use their credit card as a debit card. You can add an additional $40 (or whatever amount you choose) to your purchase, then pocket the difference in cash. It’s not a cash advance, so there are no fees.
What it’s worth: While it’s mostly a time-saver, you could avoid a few bucks of ATM fees and the hefty costs of a credit card cash advance.
What’s in the fine print: Your cash will still be subject to the same APR you’re paying on other card purchases, and the service is only available at certain stores.
Perk: Emergency travel assistance.
How it works: Get into a bind while you are out of the country, and some credit cards will step into the fray, whether you need help finding an American doctor or replacing a stolen passport. Discover even offers 24-7 translation services over the phone.
What it’s worth: A helping hand is priceless, but an on-the-ground guide could run you $75 an hour or more, depending on where you are.
What’s in the fine print: Some services, like translation, are free, but you’ll be charged for costs involved in, say, getting you a new passport.
Perk: Help with car shopping.
How it works: With American Express’s car-buying program, you use an online interface to build your dream car, then see a low price and a list of certified dealers who will honor it — before you enter your contact info. On used cars, you’re guaranteed to pay less than the Kelley Blue Book price.
What it’s worth: You could potentially save anywhere from a few hundred to few thousand dollars — without the stress of negotiating. Plus, if you find a lower price elsewhere, American Express will refund the difference.
What’s in the fine print: To take advantage of the low-price guarantee, you have to find a better-priced car with the exact same options and features. And you only have three days to do it. Good luck!
Perk: Price protection.
How it works: If you use your credit card to buy anything from a stereo to a sweater, then find the same thing for a lower price elsewhere within 60 days, your credit card will refund the difference. No more shopping anxiety!
What it’s worth: Your credit card sets the limit, but for a Citi MasterCard, you can get back up to $250 a pop, or $1,000 a year.
What’s in the fine print: You’ll have to produce your original receipt and a print ad showing the lower price — and for most cards, that means no online advertisements. (Seasonal sales and close-outs are also on the “no” list.) Most credit cards also have a list of excluded items, such as cell phones, cars and refurbished items.
Perk: Roadside assistance.
How it works: If your car breaks down, simply call your card’s customer service line and they’ll arrange to send a tow truck your way. Jump-starts, tire changes and locksmith services are usually included, too.
What it’s worth: Depending on what help you need, roadside assistance could save you $50 to $100 by charging you only a flat fee for the service call; with a Visa Signature or a Chase BP Multicard, it’s $59.95. Others charge a prenegotiated price for each service you use, so don’t expect to save much besides hassle.
What’s in the fine print: With many cards, you’re merely getting an over-the-phone tow truck referral, not any discount on services.
By: Melody Warnick (via CreditCards.com)
07.May.10 Uncategorized Comments (0)
