Tag Archives: Debit Cards

Mar 2 2024

DANGERS OF DEBIT CARD USE

Debit cards do not provide the same protection as credit cards when lost or stolen. As a result, money experts recommend not using a debit card in these situations:

  • When buying airline tickets; if the airline goes out of business, you may have no recourse for a refund.
  • Non-bank ATMs are more likely to have skimmers that steal debit card information.
  • When making a gas station purchase a hold may be put on funds in your bank account, which could result in Bottom of Forman overdrawn balance when trying to make other purchases.
  • Use a credit card for online buying for stronger legal protection to dispute a charge.
  • In restaurants with high turnover, a dishonest employee may get access to your card number; again, a credit card provides more protection.
  • When buying appliances a credit card may give you an extra warranty, which would not be

available with a debit card.

With a debit card you can be responsible for up to $50 of unauthorized transactions if you report a lost or stolen card within two business days. Then, your liability can be as high as $500 for fraudulent charges if you don’t report the situation within 60 days after receiving your statement.  After that, you have the potential of unlimited losses for unauthorized use of your debit card.  In contrast, with a credit card, you are not responsible for unauthorized charges of more than $50.

Consider only using your debit card to withdraw cash to make purchases. Since not everyone will take a cash-only approach to control spending, there is another action to protect yourself. Use a second checking account for your debit card. Fund this second account only with money that you plan to use for debit card activity. Then, in case of a lost card or fraud, you would only lose the smaller amount kept in that second account with your main checking account not at risk. 

For additional information on debit cards, click here.

Teaching Suggestions

  • Have students survey several people to determine common uses of debit cards.
  • Have students create a podcast to warn others of the dangers associated with debit cards.  

Discussion Questions 

  1. Why should consumers become more aware of the potential dangers of debit cards?
  2. What actions do you take to protect your debit and credit cards?
Mar 4 2017

Overdraft Opt-in or Opt-out?

Most financial institutions offer overdraft programs for checking accounts, which for a fee covers a transaction where there is not enough in the account.  However, this service can result in several fees before the next deposit is made.  For debit cards, an overdraft fee cannot be charged unless you have agreed (“opted in”) to these fees.

To reduce or eliminate overdraft fees, these actions are suggested:

  1. carefully track your balance; sign up for low-balance alerts
  2. check your balance when making a debit card purchase; also consider other checks that may not yet cleared
  3. do not opt-in to an overdraft program for your debit card, or opt-out if you are currently opted in; while your debit/ATM may be declined, you will avoid high fees
  4. link your checking account to a savings account to cover overdrafts
  5. contact your financial institution to determine if you are eligible for a line of credit or a linked credit card to cover overdrafts
  6. compare account fees at other financial institutions

Complaints related to overdraft fees or other financial services may be submitted at   http://www.consumerfinance.gov/complaint/ or by calling 855-411-2372.

For additional information on overdraft programs, click here.

Teaching Suggestions

  • Have students search online or contact the costs associated with overdraft fees at various financial institutions.
  • Have students prepare a creative presentation describing actions to take to avoid overdraft fees.

Discussion Questions 

  1. Describe situations that might result in overdraft fees.
  2. What are methods to take to avoid overdraft fees?