November 3, 2009

CREDIT CARD vs. DEBIT CARD


Let’s see, should I use my credit card or debit card for this purchase---humm. A quandary most of us face when shopping or eating out. After being stung a few times by an unlikely predator, I have learned a few lessons.

If you are making large, purchases do not use your debit card! Debit cards do not offer the same safe guards as credit cards when it comes to returns. With credit cards, you are able to reverse the charges or at least dispute them. Keep in mind that once the merchandise is returned, the credit card company will reverse the charges with proof of the return. Most stores have a return policy, which must be posted, usually at the customer service center, or ask at check out.

When you are using a debit card be very cautious with your spending. Sometimes that mental check register we carry around can be a bit off; then it’s overdraft time. Exorbitant fees’ for this are outrageous! One thing to keep in mind, the new credit card laws only restrict over limit fees on credit cards. They do not protect us from overdraft charges on our debit cards. To protect yourself check with your bank about overdraft protection. Just make sure you question the APR rate, which can be very pricey. My bank of choice is a credit union and their rate of interest on my overdraft protection is 15.00%. Outrageous, I know but it is nice to have a cushion just in case.

DO NOT; use your debit for online shopping! Always use a credit card because the liability for unauthorized charges is capped at $50.00. If your credit card is lost, stolen or compromised in any way you must notify the credit card company within two business days to limit the liability. A debit card loss means they can strip your bank account and overdraft if you have one. You could be responsible for up to $500.00 of unauthorized charges so check with your bank concerning liability and time limit for reporting debit card loss.

Keep in mind that it is much safer to use your debit card as a credit card, which eliminates the use of you pin code. This is a built in protection for you and your account. Some card companies may extend the “no liability” clause to a debit card, when used as a credit card, for purchases. One may even consider having a separate account for the debit card, with limited funds to protect their selves from thieves who could empty their bank account.

Before buying a prepaid credit or gift card check on all the “what if’s”. These have less fraud protection then debit cards and more fees’ attached. Some of those fees’ include monthly, dormancy, and usage. If you are giving a gift, you might want to make it good old cash unless you’re sending it through the mail. The best option for monetary gifts through the mail is a postal money order made out to the recipient. I once sent cash through the mail and the recipient received the card less the cash. The envelope was precisely sliced open on one end. Have you ever watched the documentaries on postal workers who commit robbery on the job?

Always protect yourself with careful credit card usage and mailing cash gifts. I am the voice of experience on these issues. I used my AMX card to order and item by phone. A few days later, I received a call from the AMX security department. They stopped a charge for $500.00. Someone was trying to buy a Doney & Burke purse using my AMX number. Since I NEVER, make purchases in that amount AMX saved the day. My card was canceled and a new one sent out within 24 hours. Oh, and by the way, the company I ordered from through an 800 number was located in Las Vegas. The same area where the charge was attempted.

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