Six Places to NEVER use your Debit Card

The bank issuing your debit card offers fraud protection like a credit card, with one BIG exception. Your debit card has a direct link to the REAL money in your checking account.

A crook can clean you out in 10 seconds flat.

How are you going to pay the bills while you are waiting months for your bank to complete a fraud investigation?

It’s better to be safe than sorry… avoid using your debit card in these 6 situations to limit the chances of a thief grabbing all your cash:

1. Restaurants

The problem with restaurants is that in most cases the server takes your debit card out of sight to process the transaction. He or she could easily run your card through a pocket-sized skimmer hiding in their apron, stealing your card number and security code off the back. They don’t need your pin number to shop online!
It may take months, or years, for your card number to be used or sold on the black market. One day, you’re okay… the next, you could be broke. You have only 60 days to report a card number stolen, even less time if the actual card is stolen or gone, too. And once you report the fraudulent charges, it can take two months or more to get your money back.

The Federal Trade Commission had a great page explaining how much you could be responsible for depending on how long it takes you to report the theft of your card. You’ll also find helpful info explaining what to do and who to contact when you discover such a theft.

2. Gas pumps

Thieves can install card skimmers on the outside of the pump’s card reader. You’d never know it was there because it blends right in and looks like part of the pump. They can even hook up a pinhole camera to capture your pin number on video!

Plus, gas stations usually put a hefty hold on your account when you fill up. The gas station has no idea if you are buying one gallon for your lawnmower or 75 gallons for your boat. So, to cover themselves, they put a hold on your debit card of $50 or so to make sure the transaction will be covered. This hold immediately reduces your available balance and may take up to 48 hours to be credited back.

If you have $100 in the bank and spend $15 on gas, you should still have $85 to spend. But, because of the $50 hold, you only have $50 to spend. But you don’t know that, so you buy $55 of groceries and go out to lunch for $10. Hello Overdraft fees! No thank you… use a traditional credit card or cash at the pump.

If you have to use debit, go inside to pay in person and specify an exact amount instead of just filling up.

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3. Online

Crooks are sneaky and always one step ahead of the software we consumers use to protect ourselves online. The best bet is to use a traditional credit card for online shopping. That way, if your billing information is intercepted by a hacker, the money you need for bills and living expenses is still safe.

Usually, your stolen card info will first be used for something small and ordinary, like food or clothing, to test the card to see if it will work. If that small transaction goes through, the thieves will shop till they drop and clean you out in a matter of minutes.

Check your bank statement as soon as it arrives in the mail, or better yet, check your posted transactions every night online. The sooner you alert the bank about a suspicious charge, the faster you protect what’s yours.

4. Big Purchases

Never pay cash or use debit for big purchases, like TVs, appliances, furniture, or vacation packages. If something goes wrong, or the item is defective, you’ll have no way to apply pressure to the retailer to fix the situation because they already have your money.

But when you use credit, you can report the problem to your credit card company and they can withhold payment or issue a charge-back until the problem is taken care of. The retailer will be much more motivated because they know they won’t get a dime until they make it right.

5. Hotels

Just like gas stations, hotels put a hold on your method of payment when you check in… but it is MUCH larger. Typically, they’ll hold the entire cost of your room plus anywhere between $50 and $200 per day of your stay to cover incidentals or possible damages.

Those extra fees are often not disclosed when you check in, and may cause your card to be declined when you go souvenir shopping or out to eat. If you use one credit card to secure your room, and another way to pay while you are out having fun, you can avoid the hassle.

My best advice, ask exactly what the hold amounts are when you check in. If they are ridiculous, and they usually are, try to negotiate for a different amount or some extra perks, like buffet coupons or a discounted room rate. The hotel clerks don’t get paid on commission… they will probably throw a bonus your way just to make sure you don’t complain to their bosses!

6. Anywhere shady

OK, so your best friend brings you to a hot new club… but is way out on the very wrong side of town. DO NOT use your debit card!

Anytime you are not familiar with an area, or get that little tickle in the back of your brain telling you to watch out… you may be putting your hard earned cash at risk if you use debit. Carrying cash around with you may not be so smart, either. So stick to credit in these situations. Bring just one card out with you and make sure you have the card number and customer service telephone number written down somewhere safe at home in case something does go wrong.

Debit cards are great for lots of other purchases, like groceries, dry cleaning, and other every day expenses. Just make sure you keep a close eye on your card during processing, check your receipt for errors before leaving the store, and review your transactions frequently to spot any red flags.

Some information in this article is based on a recent article in The Buffalo News.

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What is a Debt Management Plan
Credit On Campus – Out of the Frying Pan and Into the Fire
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This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult a attorney who specializes in consumer rights and defense.

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