The widely popular Debit card/check cards offered by almost
all banks have become the standard way to pay for
everything from itunes music to rental cars. Where the
government states that debit card transactions have grown
more than 20 percent a year and have out grown more than
all credit card transactions.
As there appeal is very understandable. As Debit cards are
quick and easy to use. But using a debit card can cost you
hundreds and even thousands of dollars a year, no really.
So I will show you why you should never carry the evil
debit card.
More Risky than Carrying Cash
First you must understand that all U.S. banking
institutions lost an estimated $662 million to debit card
fraud in 2005. So guess what these banks trying to do?
They are trying to recover this money that is being lost.
You would probably be safer to just carry cash.
Although you don't have much support if your card is lost
or stolen, but at least your loss is limited to the amount
of the missing money. With having a debit card you will
put your entire bank balance this is in your bank account
at a high risk. If you link your checking account to your
savings account to avoid overdrafts, you put the balance in
both accounts at risk, as you will face ridiculous
overdraft charges.
Now think about this, where if a thief gets a hold of your
credit card, the federal Truth in Lending Act will limit
your liability for any fraudulent credit card charges to
only $50 yeah that's right only $50. You may not even have
to pay that much, as many credit card companies or banks
will not impose any charge on their defrauded customers.
And while the case of fraud is being investigated, you can
refuse to pay any part of these unauthorized charges.
But the evil Debit cards fall under a very different set of
laws, known as the Electronic Fund Transfer Act. To limit
your liability to $50, you have to notify your bank within
two business days after discovering that you're debit card
has been lost or stolen. And if you wait longer than that,
but if you wait to give your bank notice of the fraudulent
transactions within 60 days of when your bank statement is
mailed to you, then your maximum liability jumps to $500.
Now if you miss that deadline and you could lose all the
money in your account.
Because the debit card accesses the fund directly out of
your bank account, you can be left without your grocery
money while the fraud claim is being investigated.
Now this is stupid!
A single trip to Burger King was enough to send Tom
Martin's checking account into absolute freefall. Where
Tom had made the mistake of paying for some fast food with
his debit card. He thinks he spent only about $3 more than
he had in his bank account. But unfortunately, by the time
he had realized that there was a problem, the bank had hit
him for about $350 in overdraft fees. So at $35 per charge,
it's easy to rack up hundreds of dollars in needless NSF
fees.
The Center for Responsible Lending, a consumer group,
estimates that overdraft charges from debit cards cost
people about $8 billion each year. I still remember when
banks used to refuse any debit card transaction that would
overdraw a depositor's account. But not any more. As
banks could warn depositors when their accounts are close
to being overdrawn. But they don't.
Instead most of these financial institutions will
automatically enroll their depositors in a program that
loans their customers the amount of the overdraft—but
at a steep price. The Center for Responsible Lending
estimates that Banks that offer these lending programs can
expect an drastic increase in overdraft revenues, as much
as 200 to 400 percent per year.
With it being calculated as an interest rate, rather than a
fee, the cost of these loans is ridiculous. The average
amount of a point-of-sale purchase that overdraws an
account is $14.75. But the average over draft fee is more
than double that amount. According to the agency, most
consumers only use these loans for a few days. So on an
overdraft loan, the annual percentage rate can be as high
as a WOPING 20,000 percent.
In defense of this practice, I consider to be financial
rape, the bankers like to point out that it's the
responsibility of the account holders to monitor their
account balances and avoid overdrafts. Which is ridiculous
but, of course, that requires the account holder to know
how much money is in their account. Which is the reason why
we trust banks to hold our money for us but instead the
choose to take us for every hard earned dollar that we
have. I think that I will just stick to carrying cash
----------------------------------------------------
Export author Keishon Martin is the owner of KeyWorldWide
Inc. which owns and operates http://www.GetRichinMusic.com
http://www.NewMoneyCredit.com and
http://www.getmoneymoney.com visit their websites for more
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