Debit cards are widely used by people all over the country to make purchases and meet expenses. These cards are more beneficial than credit cards as they do not have additional expenses in the form of line of credit.
This is the era of new-age banking and easy payments, where the process of making overseas payments has been simplified as much as buying a grocery product over the counter. One of the main reasons for this easy mode of payments available can be accredited to the presence of debit cards.
The presence of debit cards has definitely made the life of an individual quite simplified. Debit cards offer multiple benefits to its users and this is one of the main reasons why they are immensely preferred over the traditional credit cards. Debit cards charge absolutely no fee for transactions and thus, allow the user to make purchases at ?zero liability.?
The debit cards protect an individual from potential fraudulent schemes and offer several rewards, which can be considerably used by an individual in order to cut down on their expenses.
Since the time that debit cards were first introduced for public use, they have moved on to be recognized as a universal phenomenon today. Debit cards help to give an individual the assurance of money management, convenience, and security. The interest rate charged by debit card companies, as compared to the traditional credit cards is almost negligible and thus, allows a person to control their budget to a large extent.
It has been reported that one of the main reasons why a large number of people prefer to use debit cards is because of the convenience factor. A debit card allows an individual to free himself from the hassle of carrying surplus amounts of cash everywhere. Moreover, by using debit cards, an individual will never fall short on the exact amount of change, which may be required in a transaction.
The user does not have to worry about the hassle of having to maintain a number of records regarding the transactions, as all the commercial transactions, which include the use of debit card, recorded by the financial institutions.
A large number of people all over the country prefer to make their day-to-day purchases via these debit cards. Contrary to the belief that debit cards can be used only to pay for huge monetary transactions, these can even be used to pay for gas, parking, newspaper or groceries which may be required by an individual in their day-to-day activities.
In other words, debit cards are as good as the credit cards, without the piling up of unnecessary debt, which an individual may not be able to pay later. This is possible because a debit card withdraws money directly from the user's current or savings account, thus allowing him to make purchases only till the amount which his currently available in the account.
On the other hand, an individual needs to take note of the fact that though a debit card is extremely beneficial in terms of use, a person needs to take proper care of their debit cards as these are directly linked with an individual's bank account and can be easily misused by any third person. Using a debit card does not require an individual to give a PIN number, thus making it easier for the thief to drain your bank account instantly without much of an effort.
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. Now guess what all these banks are 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 really don't have much support if your card is lost or stolen, but at least your losses are 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 connect your checking account to your savings account in a attempt to avoid overdraft charges, you put the balance in both accounts at risk, as you will face severe 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. In which you may not even be obligated to pay that much, as these financial institutions will not impose any charges 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 Mr. Martin had made at the time to be considered a small mistake, where he paid for some food using 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 can remember a few years age when banks would refuse any debit card transactions that would overdraw a customers 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
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