Ask Andy: Debit card dangers - Action News 5 - Memphis, Tennessee

By Andy Wise - bio | email

MEMPHIS, TN (WMC-TV) - If you have been trying to cut back on your credit card spending, you may be pulling the debit card out of your wallet more often.  But there are several catches to debit cards.

In the old days of debit cars, if you did not have the money in your account to cover a purchase, it just would not go through.  The card would come up as "insufficient funds" and you might feel a bit of embarrassment, but that was about it.

Now, card companies have figured out that they can make more money by slapping you with an overdraft fee, usually $35 or more, instead.

Another danger with debit cards is clerk errors.  For instance, say you buy something for $49.95, but the clerk charges you $495 instead and you do not notice it before you leave.  If that kind of mistake happens with a charge card, you would have a month to dispute it.  The second you put something on your debit card, the money is gone.

Many debit cards do not offer much in the way of fraud protection.  While credit card liability is usually only $50, debit card liability could be as much as $500 if you notify your bank after two days.  You could also lose everything in your account if you do not notice the theft within 60 days.

Some banks are voluntarily honoring the $50 limit with debit cards, but it could take the bank a few weeks to decide if you are only on the hook for that amount.  In the meantime, if your account has been drained, you will have a hard time paying your bills.

Never use your debit card at a restaurant, especially ones where you cannot see the server swipe it.  There have been many instances of a server hiding a skimmer in his apron and swiping a customer's debit card number for instant identity theft.

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