For decades, I’ve pleaded with my readers not to use debit cards because they are not safe. And for years, I warned my sons about the dangers of riding motorcycles because they are not safe.
Has anyone listened and taken heed? Debit cards are more popular than ever. And on the subject of motorcycles in my family, to date, I have a 50 percent fail rate. For me, debit cards are the motorcycles of personal finance.
I’ve concluded that the best I can do, now that so many refuse to give up their debit cards (and motorcycles), is to nag, preach, and harangue on the importance of crash helmets and safety equipment.
The odds are stacked against you in both debit cards and motorcycle travel. You must know what you are dealing with, how to react, and what to do when things turn ugly.
Think Like the Bank
For you, a debit card is a convenience. For your bank, it’s a huge moneymaker. If you allow your account balance to get too low, you could get socked with big bounce fees. If you forgot to track a few small debits and a large check comes through later in the same day, many banks will hold the small debits and honor the large check first and then charge you a $34 bounce fee for each debit transaction that exceeds your balance.
Create a Cushion
If you use a debit card, you cannot afford to let your account run low. Figure out a way to keep a cushion that you never use as your protection against inadvertent bouncing.
The bank will not stop you from using your debit card just because your account runs dry. In fact, they are quite happy when this happens so they can whack you with huge fees. Get online access at your bank’s website so you can check your balance and account activity every day.
Stick to Cash
Cash is cool because it is limiting. Cash can’t bounce. I find spending cash keeps me more aware of what I’m doing. Plastic just isn’t the real thing. Retailers love to see you swipe a plastic card for payment because they know you’ll spend more in their store or at their website than if you are limited by the cash in your wallet.
Deposits Are Slow; Debits Are Fast
Don’t assume you’ll have immediate access to funds you just deposited. Most banks place a hold on deposits for a few days; others place a hold for up to a week. And if your debits come through while the deposit is on hold? Brace yourself. It will be just as if you had never made the deposit.
Don’t assume anything. A bank’s policies and guidelines can change overnight, so keep up. And if you get burned by your bank, don’t take it lying down. Speak up. Explain your situation, and ask them to waive the fees and penalties. If your bank or credit union isn’t known for its customer-friendly policies, remember there are plenty out there that are.
Mary invites you to visit her at EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at EverydayCheapskate.com/contact, “Ask Mary.” Tips can be submitted at Tips.EverydayCheapskate.com. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog and the author of the book “Debt-Proof Living.” Copyright 2021 Creators.com